•;* 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

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http://www.archive.org/details/businessmanagemeOOchiciala 


BUSINESS 
MANAGEMENT 


STUDENTS' 
BUSINESS  BOOK  SERIES 

Correspondence 
How  to  Write  Business  Litters 
Sales  Correspondence 

Business  Correspondence 

The  System  Book  or  Standard  Paragraphs 
and  Form  Letters 

Business  Correspondence  Libeart  ( Thrte  tolumet) 
Advertising 

How  to  Write  Advertising 

Advertising 

Good  Will,  Trade-marks  and  Unfair  Teasing 

Bank  Advertising  Methods 
Finance 

Credit  and  Collection  Methods 

How  to  Finance  a  Business 

Credits,  Collections  and  Finance 
Buying 

Purchasing  Problems — Buying  and  Hiring 
Selling 

Salesmanship  and  Sales  Management 

Selling  Methods 

Selling  Methods — Retailing 

Selling  Methods — Real  Estate 

Selling  Methods — Fire  Insurance 

Selling  Methods — Life  Insurance 
Salesmanship 

Personal  Salesmanship 

Developing  Tact  and  Persuasive  Power 

The  Knack  of  Selling 
Retailing 

Store  Management 

Keeping  Up  with  Rising  Costs 
Management 

Personal  Efficiency  in  Business 

Office  Management 

Business  Administration 

Business  Management 

Personality  in  Business 
Office  Work 

Accounting  and  Office  Methods 

Costs  and  Statistics 

The  Cost  of  Production 
Production 

Outlines  of  Factory  Operation 

Industrial  Organization 

The  Knack  of  Management 

How  Scientific  Management  Is  Applied 

More  Power  from  Coal 
Factory  Management  (Six  volumes  in  the  series) 

Buildings  and  Machinery  and 

Maintenance  Equipment 

Materials  and  Supplies      Labor 

Operation  and  Costs  Executive  Control 

A.  W.  SHAW  COMPANY 

Publishers  of  System  and  Factory 
NEW  YORK  CHICAGO  LONDON 


BUSINESS 
MANAGEMENT 


OUTLINING  SOUND  POLICIES 

KEEPING  THE  BUSINESS  IN  BALANCE 

HOW  MANAGERS 

ORGANIZE  DETAIL  AND  MEET 

EMERGENCIES 


A.  W.  SHAW  COMPANY 

CHICAGO  NEW  YORK 

LONDON 


£r(  $~c?3 


A 


<ls 


WITHDRAWN  FROM     b5^ 
COOPER  UNION  LIBRAIWBcr7<f3 


Copyright,  1914,  by 
A.  W.  Shaw  Company 

Copyright,  Canada,  1914,  by 
A.  W.  Shaw  Company 


Entered  at  Station .ts' .Hall.  .London 
A.'W.  Shaw  Cam^kn'jr.fLjid.'  • 


*  «  ».•  Under  the  title 

i  . ,  •  "The  Library  of  Business  Practice" 


BUSINESS  MANAGEMENT 


Bus.  Admin. 
Library 

h 


I— MAKING  GOOD  AT  THE  MANAGER'S 
DESK 

Editorial  by  John  Wanamaker     .  7 

I    The  Hardest  Question  in  Business  ....  9 

By  Carroll  D.  Murphy 

II    Taking  Your  Problems  to  Pieces     ....  25 

By  John  H.  Hanan, 
President,  Hanan  and  Son 

III    How  the  Executive  Keeps  in  Touch       ...  S3 

By  Kendall  Banning 


II— MANAGING  MEN,  MONEY  AND 
DETAIL 

Editorial  by  Clarence  S.  Funk 43 

IV    Training  Men  for  Leadership 45 

By  Frederick  A.  Delano, 
Receiver  and  Former  President,  The  Wabash  Railroad 

V    The  Monet  End  of  Management      ....         51 
By  George  H.  Cushing 

VI    Short  Cuts  in  Executive  Work        ....  59 

By  George  H.  Cushing,  and  Wesley  A.  Stanger,  Man 

ager.  Royal  Typewriter  Company,  Chicago  Branch 


III— HOW  FOURTEEN  MANAGERS  HANDLED 
THEIR  BIGGEST  PROBLEMS 

Editorial  by  Edward  B.  Butler 71 

VII    How  Six  Proprietors  Made  Good    ....  73 

By  Don  E.  Mowry 

VIII    How  I  Went  into  Business  for  Myself  .        .  86 

By  Albert  Hoefeld,  President,  Albert  Hoefeld,  Incor- 
porated; Vincent  C.  Price,  Founder,  Price  Baking 
Powder  Company;  Joseph  E.  Haskell,  President. 
Haskell  Brothers;  Benjamin  F.  DeMuth,  Formerly 
of  Delluth  and  Company 

IX    The  Policy  isehind  New  York's  Oldest  Store       .  99 

By  Edward  Mott  Woolley 


1260722 


CONTENTS 


X    Building  a  Business  to  Order  .....        Ill 
From  an  Interview  Given  by  H.  Gordon  Selfridge, 
Managing  Director,  Selfridge  and  Company 

XI    Sixty  Years  in  the  Market  Place  ....        119 
By  Zalmon  G.  Simmons, 
Founder,  Simmons  Manufacturing  Company 

XH    Management  Blunders  to  Avoid       ....        135 
By  Harlow  N.  Higinbotham, 
President,  The  National  Grocer  Company 
Former  Credit  Manager,  Marshall  Field  &  Company 


SPECIAL  ILLUSTRATIONS 


I  HOW   TO  KEEP  TOUR  BUSINESS   IN   BALANCE 

n  REPORTS  THAT  GUIDE  THE  EXECUTIVE 

III  A  manager's  "time  table"    . 

IV  KEEPING  sales  up  to  the  mark 
V  following  overtime  figures 

VI  HOW  TO  RAISE  MONEY        .  . 

VH  for  the  executive's  desk     . 

vin  AN  office  "mail  bag"    .        . 

IX  HOW  PARK  AND  TILFORD  ORGANIZE  THEIR  STORES 

|      X  SELFRIDGE'S  PLAN  OF  ORGANIZATION   AND  CONTROL 


11 

35 
37 
38 
39 
53 
63 
67 
107 
115 


/ 


COMPLETE  INDEX 
FOR  THE  TEN  VOLUMES 

How  to  Use  the  Library 147 

— finding  a  reference  quickly 148 

.  — when  you  wish  to  refer  by  author  ....  148 
— special  points  on  lines  of  business  ....  149 
complete  reading  and  study  index  by  8ubject3         .  149 

Index .         151-198 


PART  I-MAKING  GOOD 
AT  THE  MANAGERS  DESK 


My  Measure  of  Success 

T^HE  architect  and  executive  who  design  and 
*  direct  and  yet  strive  to  do  the  bricklaying, 
will  advance  not  far  and  will  quickly  wear  out. 

One  who  has  the  faculty  fo  right  selection  of  re- 
sponsible subordinates  need  also  that  wise  sense  of 
justice  and  appreciation  which  accords  unstinted 
scope  of  action  and  generous  recognition  of  results. 

The  proverbial  reluctance  to  allow  those  to 
enter  the  water  whom  we  would  have  swim  ha3 
given  short  measure  to  many  a  success. 

A  good  executive  finds,  develops  and  leans 
upon  those  who  can  carry  forward  for  him  the 
increasing  divisions  of  his  single  great  work. 

In  all  work,  as  in  all  knowledge,  there  is  un- 
limited room  for  expansion  and  advancement. 
The  business  pyramid  will  find  no  circumscribing 
dome  above  which  it  cannot  lift  its  capstone. 

Therefore,  granted  breadth  of  field  and  the 
leader's  personal  equation,  the  degree  and  height 
of  business  mastery  and  success  will  accord 
absolutely  with  the  number  and  efficiency  of  the 
supporting  body  of  workers. 

And  the  executive  will  have  the  deserved 
praise  and  reward  of  one  whose  admirable  work 
has  been  to  lead,  to  develop,  to  render  produc- 
tive; to  add  to  the  commonwealth  of  brain  and 
things  and  character. 


JOHN  WANAMAKER 

€•**,••••«    president,  The  Wanamaker  Stores 


THE  HARDEST  QUESTION 
IN  BUSINESS 

By  Carroll  D.  Murphy 

THAT'S  the  hardest  question  in  business,"  exclaimed 
one  of  the  half-dozen  managers  of  distinguished 
enterprises  recently  asked  to  list  the  vital  factors  of  con- 
trol in  an  organization — to  take  apart  the  enterprises  they 
have  brought  to  success,  and  point  out  the  ideas,  policies, 
methods  and  results  which  seem  to  them  so  important 
that  the  chief  himself  should  have  them  under  his  eye 
and  hand. 

Varied  as  were  their  replies — personal,  keen,  widely  dif- 
ferent in  approach  to  the  problem — yet  throughout  runs 
this  central  thread  of  management :  that  detail  must  be 
organized  and  everyday  results  made  automatic;  that 
the  executive  must  keep  proper  perspective ;  that  a  man- 
ager's  work  is  not  to  shoulder  many  little  tasks,  but  to 
develop  men  and  systems  for  present  routine,  and  thus 
reserve  his  energies  for  the  greater  plans,  decisions  and 
initiatives  on  which  the  future  is  to  be  built. 

"The  measure  of  a  manager's  value,"  said  Clarence 
Funk,  "is  his  ability  to  put  men  in  charge  of  his  vari- 
ous departments  who  are  stronger  men  in  their  lines  than 
is  he."  "I  expect  to  put  in  half  of  each  day  at  the  of- 
fice after  I  am  dead, ' '  Cyrus  K.  Ourtis  once  said,  humor- 
ously hinting  at  the  organization  of  men  and  detail  by 
which  he  gets  things  done  present  or  absent.    "The  im- 


10 AT    THE     MANAGER'S    DESK 

portant  thing,"  another  skilful  manager  often  says, 
in  explaining  his  ability  to  extend  his  oversight  through- 
out a  great  business,  "is  to  distinguish  significant  from 
trivial  detail."  "I  won't  let  detail  get  to  me  on  any 
terms,"  replied  J.  S.  Kendall  in  explaining  how  he 
sifted  the  important  from  the  negligible.  "The  imme- 
diate loss  from  a  small  blunder  is  insignificant  and  I  pay 
certain  employees  to  analyze  the  day's  work  of  the  con- 
cern so  that  I  can  stop  cumulative  losses." 

William  A.  Field's  answer  makes  the  same  point,  but 
in  the  nature  of  a  warning  to  employees  who  aspire  to 
managerial  places.  "Young  men,"  said  he,  "try  to 
handle  too  much  detail  and  are  crushed  beneath  their 
load. ' '  From  his  own  experience,  Edward  B.  Butler  car- 
ried further  the  same  hint  to  manager  and  men :  "  It  is 
hard  to  get  a  man  to  let  go  of  detail — to  grow  up  into 
control — to  think  for  his  subordinates  who  do  not  think. ' ' 

In  his  management  John  G.  Shedd  would  subordinate 
personal  initiative  to  nothing  else.  "Energetic  origina- 
tors in  merchandising,"  said  he,  "may  be  stifled  by  sur- 
rounding them  too  thickly  with  figures  and  regulations. 
.  .  .  .  Going  beyond  a  reasonable  limit  with  statis- 
tics may  kill  the  Napoleons  of  business."  The  strength 
which  this  composite  initiative — the  enthusiasms  and  en- 
ergies of  manager  and  men  working  together — gives  to  a 
business  was  neatly  brought  out  by  W.  E.  Clow:  "I 
hire  men  to  make  me  hump," 

MONEY,  men  and  service  are  the  tools  of  the  executive 
— varying  degrees  in  which  they  are  brought  into 
play  in  the  five  different  types  of  management. 

The  great  essentials  of  a  good  manager  are  brilliantly 
summarized  by  two  other  men  in  control  of  great  enter- 
prises.   "I  want  executives,"  E.  A.  Filene  often  says, 


MANAGEMENT    ESSENTIALS 


11 


"who  can  think  straight,  handle  men  and  buy  money 
well."  "Successful  men,"  E.  P.  Ripley  has  said,  "have 
always  known  how  to  organize,  supervise  and  deputize. ' ' 
The  battle  with  detail  and  the  problem  of  shaping  men 
to  your  work — freedom  from  routine  and  sure  contact 


KEEPING  YOUR  BUSINESS  IN  BALANCE 

i 

MEN 

i     MONEY 

SERVICE 

r 

INSPIRE 
TMIM 

CAPITALIZE 
THCM 

INSURE  ITS 
SAPITT 

U9C  IT 

PROFITABLY 

MAKE  IT 

SATISFACTORY 

PRICE  IT 

JUSTLY 

L 

PLAN 

ASSIGN 

WATCH 

CORRECT 

FIGURE  1:  Tlie  executive  who  keeps  his  organization  properly  balanced 
takes  into  consideration  men,  money  and  service,  and  exercises  the  four  func- 
tions of  planning  tasks,  assigning  duties,  watching  results  and  correcting 

mistakes 

with  essentials — getting  today's  business  done  and  plan- 
ning a  secure,  progressive  future — are  suggested  by  all 
these  executives  as  the  essential  aims  and  the  true  view- 
point of  the  manager.  Closer  study  of  the  lines  along 
which  the  ambitious  employee,  the  personal  proprietor 
and  the  corporation  executive  must  work  shows  that 
the  three  great  business  mechanisms  which  the  manager 
must  control  are  men,  money  and  service.  According 
as  different  concerns  emphasize  one  or  another  of  these 
factors  in  their  schemes  of  management,  policies  of 
executive  control  may  be  roughly  divided  under  five 
headings : 

(1)     Detail  Management.    Most  managers  are  driving 
themselves  to  their  physical  limit  in  the  handling  of  th* 


12 AT    THE    MANAGER'S    DESK _ 

details  of  service,  employment  and  especially  finances. 
Some  executives  have  been  literally  crowded  out  of  this 
position  by  the  growth  of  the  business  and  have  taken 
a  stand  at  some  point  along  the  current  of  trade,  where 
by  watching  every  order,  every  credit,  every  contract  or 
expense  item,  they  can  fairly  judge  and  control  the 
business. 

(2)  Money  Management.  Many  proprietors  and  di- 
rectorates guide  their  businesses  entirely  by  ledger  state- 
ments and  throw  upon  subordinates  hired  to  round  out 
their  ability  all  other  matters  relating  to  the  conduct  of 
the  enterprise.  In  one  case  a  directorate  which  is  man- 
aging a  business  entirely  as  a  matter  of  investments  and 
profits  has  never  seen  the  chain  of  stores  from  which  its 
dividends  come.  A  detail  manager  pledged  to  enthu- 
siasm by  a  generous  salary  has  authority  over  everything 
except  financial  policies.  The  disadvantages  of  this  plan 
are  that  there  is  no  proprietary  control  of  the  methods 
used  in  dealing  with  the  trade,  nor  of  the  spirit  among 
the  men;  the  business  runs  at  high  speed  but  roughly, 
with  much  jarring;  and  the  management  has  too  little 
real  knowledge  of  conditions  to  forecast  the  future  most 
effectively. 

(3)  Leadership  Management.  Encouragement  and 
the  rousing  of  enthusiasm  among  employees  is  the  con- 
tribution this  type  of  manager  makes  to  his  business. 
His  is  an  enterprise  that  requires  extraordinary  initia- 
tive ;  his  men  have  to  be  keyed  up  to  the  fighting  spirit — 
they  need  the  "flaming  torch"  to  lead  them.  Systema- 
tized routine  is,  therefore,  left  to  handle  problems  where 
a  solution  has  been  found  and  a  precedent  established. 
The  management  devotes  itself  to  "breaking  trail"  in 
every  new  and  difficult  path  of  the  enterprise. 

(4)  Guiding  Management.    Some  managers  and  di- 


MANAGEMENT    ESSENTIALS 13 

rectorates  put  their  entire  organization  as  a  tool  in  the 
hands  of  their  most  brilliant  executives,  advising  and 
aiding  them  to  carry  out  for  the  profit  of  the  concern 
whatever  inspirations  promise  best  or  to  exercise  the 
particular  genius  of  each.  This  is  the  type  of  business 
where  the  manager  occupies  a  broad  field  and  insists 
only  on  dividends  rather  than  confining  his  business  to 
a  definite  product  or  service.  This  policy  is  especially 
the  recourse  of  a  concern  which  has  outgrown  one  line — 
the  big  business  viewpoint,  where  the  manager  has  per- 
haps realized  his  visions  and  depends  on  the  inspirations 
of  his  men  for  further  expansion. 

(5)  Balanced  Management.  Rockefeller's  success  is 
credited  to  the  poise  which  he  has  always  maintained  in 
his  corporation.  In  a  business  so  balanced,  neither  men, 
money  nor  service  has  undue  emphasis;  no  one  depart- 
ment or  method  is  allowed  to  excel  or  overtop  others,  but 
every  part  constantly  learns  from  other  lines ;  constantly 
is  kept  up  to  the  mark  and  in  proportion  with  all  others. 
This  type  of  management  combines  the  last  two  and 
rounds  out  the  incompleteness  of  all ;  the  manager  is  not 
only  a  constant  inspiration  to  all  departments,  but  makes 
full  use  of  whatever  inspiration  he  can  draw  from  his 
subordinates.  He  realizes  the  necessity  of  neglecting 
no  present  essential — neither  men,  investment  nor  serv- 
ice— and  has  so  organized  his  method  of  securing  re- 
ports, making  brief  studies  in  his  various  departments 
and  arousing  a  partnership  spirit  among  his  men  that 
he  is  free  to  dream  ahead  and  plan  a  greater  future  for 
4he  enterprise. 

Most  men  fall  short  of  managerial  success  because 
they  are  one-sided.  All  of  us  have  seen  the  proprietor 
who  allows  himself  to  be  flattered  on  his  weak  points, 
equips  himself  with  subordinates  who  duplicate  rather 


14 AT    THE    MANAGER'S    DESK 

than  round  out  his  abilities,  and  dodges  haphazard 
through  each  day's  detail  with  no  distinct  scheme  of 
management. 

The  problem  of  breaking  away  from  this  condition  has 
been  solved  in  a  suggestive  way  by  the  manager  of  a  real 
estate  business  that  last  year  sold  more  than  four  mil- 
lion dollars'  worth  of  property.  This  executive  recently 
sat  with  a  wholesaler  in  the  latter 's  private  office.  Ten 
times  within  a  half  hour  their  talk  was  disturbed  by 
salesmen  coming  in  for  O.  K's  on  routine  credits. 

"You  cleared  a  quarter  of  a  million  this  last  twelve 
months,  didn't  you?"  the  real  estate  man  asked  his 
friend.  "Why  not  take  six,  eight,  ten  thousand  dollars 
and  hire  an  assistant  who  can  sweep  this  detail  off  your 
desk  and  let  you  get  at  the  bigger  questions  of  your  busi- 
ness? 

"What  subordinates  will  handle  your  task — what  in- 
surance have  you  made  for  the  care  of  your  family's 
property — when  you  can  no  longer  do  this  pell  mell  day 's 
work?  One-third  of  your  time,  if  you  will  figure  up 
your  own  labor  costs  day  by  day,  is  spent  as  nothing 
but  a  routine  credit  manager." 

"But  I  can't  find  the  men,"  protested  the  wholesaler. 

' '  You  don 't  know  your  men, ' '  was  the  answer.  ' '  One 
of  them  I  think  so  well  of  that  I  have  been  figuring  with 
him  on  a  similar  position  in  my  company." 

A  week  later  the  wholesaler  spent  a  half  hour  in  the 
office  of  the  real  estate  chief.  The  latter  closed  the 
door,  sat  down  at  his  desk,  reached  under  the  edge  of 
it  and  touched  a  buzzer  once.  "That  means,"  said  he, 
"that  I  am  busy  and  do  not  wish  to  be  interrupted.  I 
pay  my  secretary  one  hundred  and  twenty-five  dollars 
to  know  that  now  she  is  to  take  the  numbers  of  any  tele- 
phone calls  for  me,  to  round  up  any  matters  I  need  to 


MANAGEMENT    ESSENTIALS 15 

go  over  yet  this  evening  and  to  get  to  me  if  something  of 
prime  importance  turns  up. 

"Five  years  ago,"  he  went  on,  "I  was  at  this  desk 
until  eleven  o'clock  every  night,  going  over  contracts 
and  ledgers.  My  business  dropped  off  because  my  sell- 
ing force  had  no  head.  Then  I  stopped — took  the  time  to 
analyze  my  business  and  find  what  went  into  my  job  as 
manager. ' ' 

This  actual  occurrence  throws  into  sharp  contrast 
what  I  have  called  detail  and  balanced  management. 
Hundreds  of  such  illustrations  are  at  hand  even  among 
million  dollar  concerns.  Routine-burdened  proprietors 
insist  upon  O.  K'ing  every  item  which  touches  expenses 
or  a  contract;  and  thus  take  away  the  initiative  of  their 
men,  interfere  without  full  knowledge  in  departmental 
work  and  neglect  to  grasp  the  loose  reins  of  company 
spirit,  present  service  and  future  progress  which  lead  up 
to  their  desks. 

One  executive  has  arranged  that  no  contractural  let- 
ter is  valid  without  his  pencil  mark  in  the  corner.  An- 
other has  a  hobby  of  picking  up  ideas  among  other 
plants,  which  he  so  forces  upon  his  department  heads  that 
they  "make  believe"  to  use  them  even  when  valueless. 
A  third  executive  who  is  strong  as  a  salesman  is  con- 
stantly interfering  on  the  artistic  side  in  the  making  of 
his  product,  although  his  judgment  on  art  is  a  joke. 

DETAIL  knowledge  of  a  business  is  essential  for  the 
manager,   but  too  much   attention  to  routine  trill 
make  him  inefficient — methods  of  money  management. 

Study  of  the  work  of  high  executives  indicates  that 
they  need  a  background  of  detail  experience  and  that 
in  emergencies  they  may  have  to  handle  the  work  of 
a  department,  but  that  they  study  themselves  as  frankly 


16 AT    THE    MANAGER'S    DESK 

as  their  employees  and  use  their  resources  to  hire  men 
who  shall  round  out  their  own  abilities.  Skilled  lawyers 
are  constantly  at  the  service  of  department  heads  in 
order  to  guard  contracts;  and  technical  men  in  a  dozen 
different  lines  are  kept  available  by  various  managers 
who  recognize,  as  Funk  has  said,  that  their  greatest  value 
is  in  securing  and  coordinating  expert  service. 

Money  management  is  an  extreme  of  this  type.  There 
is  in  New  York  a  body  of  men  whose  ability  to  manage 
money  is  drawing  dividends  from  a  score  of  middle 
western  stores  into  which  none  of  them  has  ever  stepped. 
Of  buying,  of  working  with  men,  of  planning  for 
expansion  and  choosing  "good  towns"  for  additional 
branches,  they  know  nothing.  This  ability  they  have 
bought  in  the  persons  of  a  trusty  auditor  and  an  ex- 
perienced superintendent.  They  have  limited  the  busi- 
ness to  a  cash  basis,  held  down  administrative  problems 
to  a  minimum  and  are  enabled  to  control  successfully 
merely  by  holding  the  strings  of  local  and  total 
reports,  capital  and  surplus,  purchases,  sales  and  ex- 
pense, profits  and  dividends.  By  comparative  and 
graphic  financial  reports,  they  are  shaping  the  future 
of  a  business  in  which  capital  is  the  big  factor.  Their 
method  has  been  to  reduce  men  and  service  to  their  low- 
est terms  and  shrewdly  to  pick  out  the  essentials  in  the 
control  of  funds. 

INSPIRING  men  to  their  best  efforts  is  the  method  of 
one  type  of  executive — guiding  them  in  the  field  which 
he  knows  best  is  the  method  of  another. 

An  entirely  different  spirit  is  behind  the  policy  of 
the  manager  who  heads  and  inspires  his  men.  He  may 
have  the  other  factors,  finance,  service,  future  plans, 
well  in  hand,  but  his  biggest  duty,  as  he  sees  it,  is  to  lead 


MANAGEMENT    ESSENTIALS 17 

his  men — to  teach  them  that  he  asks  them  to  go  nowhere 
except  where  he  will  go  first.  He  has  worked  out  a 
course  which  his  enterprise  is  to  take,  and  in  order  to 
keep  close  to  it,  he  goes  first.  Usually  such  a  leader 
comes  up  from  the  selling  side — a  Chalmers,  a  Cotting- 
ham.  He  suits  the  enterprise  where  production  is  auto- 
matic or  routine ;  where  financing  has  been  solved ;  where 
the  packages  that  stream  out  to  the  shipping  platform 
crowd  the  salesmen  in  their  efforts.  When,  however, 
a  mere  field  leader  happens  in  control  of  an  intricate 
producing  machine,  his  instinct  for  fast  work,  attractive 
selling  points,  and  competition  among  men  may  lead  to 
an  emphasis  on  appearance  rather  than  quality  and  on 
the  impossible  promises  of  delivery  which  mark  the  busi- 
ness that  is  out  of  balance. 

The  manager  who  guides  instead  of  leading  and  fur- 
nishing inspiration  for  his  enterprise  is  making  the  best 
of  a  temperament  judicial  rather  than  executive.  He 
hires  department  heads  who  are  full  of  ideas  but  perhaps 
lack  the  ability  to  separate  the  good  from  the  bad  busi- 
ness propositions.  His  men  furnish  many  ideas  and  in- 
spirations; he  guides  their  ambitions,  challenges  the  vis- 
ionary enterprise  and  backs  his  workers  in  carrying  out 
their  plans. 

At  his  best,  he  attracts  to  himself  partners  or  subordi- 
nates who  so  round  out  one  another's  powers  as  to  make 
for  extraordinary  efficiency. 

The  directorate  of  a  great  railroad  is  said  invariably 
to  follow  this  method  in  filling  the  president's  chair. 
Periodically  the  effectiveness  of  the  system  in  all  depart- 
ments is  discussed.  The  most  recent  executive  has  come 
up  through  the  engineering  or  operating  or  selling  de- 
partment and  in  line  with  his  natural  bias,  has  brought 
that  function  to  extraordinary  efficiency.     Striking  a 


18 AT    THE     MANAGER'S    DESK 

level  throughout  the  corporation,  another  department 
far  from  his  experience  shows  at  low  ebb.  If  an  execu- 
tive can  be  found  with  the  qualities  of  a  manager  and 
with  experience  in  this  weak  department,  he  is  elected 
to  the  presidency,  and  the  business  is  thus  made  con- 
tinually to  race  with  itself. 

In  a  similar  way,  it  is  possible  for  you  as  a  pro- 
prietor, as  an  executive  expectant  of  advancement  or  as 
a  member  of  a  governing  board,  to  test  your  perspective 
upon  the  men,  the  capital  and  the  service  under  your 
control  so  that  no  possibility  will  be  neglected. 

A  manager  who,  at  twenty-nine,  controls  a  half  million 
dollar  business  of  his  own,  hit  upon  the  plan  of  telling 
the  department  head  who  broaches  a  suggestion:  "You 
know  I  can't  remember  any  of  that.  Better  put  it  down 
on  paper." 

This  is  more  than  a  way  to  minimize  his  detail  work — 
it  is  a  definite  scheme  of  management  in  its  first  essen- 
tial— to  develop  managerial  ability  among  subordinates. 
Suggestions  now  come  to  him  on  paper,  carefully  worked 
out,  with  a  plat  of  the  location  involved,  and  with  the 
cost,  upkeep,  income,  addresses  and  all  details  in  order. 

Every  executive  knows  how  difficult  it  is  to  get  men 
to  put  cases  before  him  briefly  and  yet  so  completely  that 
he  can  make  a  clean-cut  decision — so  that  he  can  manage 
rather  than  investigate  and  administer.  This  executive 
has  learned  to  insist  upon  a  statement  that  not  only 
lengthens  his  own  reach,  but  trains  employees  to  recog- 
nize essentials  and  to  push  secondary  control  to  the  lim- 
its of  their  authority. 

Further,  he  sends  his  department  heads  anywhere  from 
Los  Angeles  to  Boston  upon  hearing  of  any  concern 
which  is  doing  something  better  than  his  office  has 
learned  to  do  it.     Every  business  has  done  some  one 


MANAGEMENT    ESSENTIALS 19 

thing  better  than  most  others.  This  manager  has  learned 
to  go  prospecting  by  proxy  and  so  get  the  gold  of 
progress  in  many  lines.  His  own  ability  is  lifted  upon 
the  platform  of  all  that  his  men  learn,  suggest  and 
achieve. 

MEN  can  be  checked  on  and  developed  by  giving  them 
responsibilities — money  may  be  controlled  by  reports 
that  summarize  facts  briefly  and  accurately. 

Seven  out  of  the  ten  well  known  managers  quoted  have 
suggested  the  importance  of  developing  initiative,  men- 
tal power,  enthusiasm  and  team  spirit  in  the  force.  This 
is  characteristic  of  the  manager  who  realizes  that  neither 
detail  nor  policy  can  be  realized  except  through  subordi- 
nates. Scarcity  of  men — the  time-worn  excuse  of  over- 
worked managers —  often  goes  back  to  the  chief's  ne- 
glect of  the  men  in  his  employ. 

Detail  gets  power  over  business  executives  because 
(1)  they  can  not  separate  the  significant  from  the  non- 
essential, or  (2)  they  can  not  so  organize  as  to  get  other 
than  eye  service. 

"One  of  the  hardest  things  for  an  executive  to  learn," 
a  sage  business  man  has  said,  ' '  is  that  while  his  men  are 
developing,  he  may  expect  nothing  to  be  done  exactly 
as  he  would  do  it.  He  must  permit  mistakes  to  'go 
through'  if  his  men  are  to  see  where  they  have  blun- 
dered." 

Another  efficient  manager  has  a  creed  something  like 
this:  "An  office  manager,  a  private  secretary  and  an 
experienced  lawyer  checking  over  and  summarizing  the 
work  of  this  concern  prevent  the  making  of  any  mistake 
so  important  as  to  endanger  our  business.  For  lesser 
mistakes  I  throw  the  responsibility  on  my  men  and,  by 
my  various  reports,  afterwards  get  at  the  blunders  which 


20 AT    THE     MANAGER'S    DESK 

indicate  dangerous  tendencies  and  require  that  I  train 
or  correct  my  men."  This  system  of  reports  brings  out 
the  relation  of  every  employee  to  finances  as  regards 
sales,  expenses  and  profit ;  to  service,  as  regards  all  corre- 
spondence, but  especially  contracts  and  complaints;  to 
new  plans  and  opportunities,  and  to  team  spirit  and 
office  discipline. 

"What  he  calls  his  "mail  analysis"  will  illustrate  his 
method.  His  secretary  goes  through  both  the  incoming 
and  the  outgoing  mail  every  day  and  makes  a  four 
o'clock  report  to  him  somewhat  as  follows: 

DAILY  MAIL  ANALYSIS 

Incoming  mail 
80%  routine 

10  buyers  make  various  complaints  as  to  serv- 
ice rendered 
Three  misdirected  letters  returned 
Terms  offered  on  Harris  contract 
H.  F.  sends  $5,000  contract  for  signature. 

On  this  report  the  chief  checks  any  correspondence  he 
wishes  to  see.  Important  outgoing  mail  is  thus  brought 
to  his  attention  before  being  posted.  Less  important 
letters  which  are  not  tactfully  written  will  result  in 
complaints  and  thus  be  called  up  later,  as  "kicks" 
are  among  the  points  most  carefully  watched.  In  a  few 
minutes  he  makes  all  important  letters  safe,  and  checks 
on  the  efficiency  of  every  correspondent  and  stenographer. 
A  monthly  report  arranged  by  quotas  and  actual  totals 
tells  him  just  how  each  department's  expenses,  sales  and 
profits  are  running.     Other  details  are  similarly  sifted. 

Guessing  at  financial  trends  is  one  of  the  worst  blun- 
ders a  manager  can  make — and,  strangely,  one  of  the 
most  frequent.  One  day  the  manager  of  the  real  estate 
department  in  an  investment  company  went  to  a  success- 
ful competitor  in  desperation  and  asked  for  his  scheme 


MANAGEMENT    ESSENTIALS 21 

of  accounting.  The  real  estate  department  was  one  of 
three  subdivisions  of  the  business  which,  taken  together, 
had  shown  a  fair  profit.  "I'll  wager,"  said  the  com- 
petitor, ' '  that  your  department  has  not  made  a  dollar  in 
three  years." 

Analysis  along  the  lines  of  sound  cost  keeping  proved 
that  in  thirty-five  months,  with  an  investment  of 
$1,500,000,  the  department  had  lost  $200 ! 

Money  is  never  still.  It  is  always  either  coming  or 
going ;  growing  or  wasting  away.  Your  desk  of  control 
is  ill-equipped  unless  to  it  come  daily,  monthly  and  an- 
nual reports  which  tell  you  in  itemized  detail,  with  what- 
ever quotas,  comparisons  and  percentage  parallels  are 
most  helpful,  your  cost  of  doing  business,  the  relative 
parts  in  that  cost  which  men,  material  and  other  factors 
play,  your  various  lines  listed  in  order  of  greatest  per 
cent  and  total  profit,  your  income,  your  turn-over,  your 
investment,  your  depreciation,  your  quick  assets  and  lia- 
bilities, your  collections  and  reserves,  your  profit  or  loss. 

Every  business,  moreover,  has  some  factor  which  is  as 
sensitive  as  a  barometer  in  reflecting  current  conditions. 
You  need  to  find  and  watch  this  essential  constantly. 
Credits,  collections,  overhead,  trend  of  buying,  raw  ma- 
terial prices,  money  rates,  labor  prices,  drift  of  working 
or  trading  population,  may  be  the  point  that  requires 
special  attention.  Financial  policy  needs  also  to  be 
determined  as  regards  the  confidence  of  the  public  and 
the  banks  in  your  integrity  and  as  to  good  credit,  ex- 
pansion from  profits  and  the  avoidance  of  investments 
that  make  your  business  top-heavy. 

"Some  details  are  as  important  as  the  totals  on  the 
bank  statement, ' '  is  the  viewpoint  of  one  manager.  The 
details  he  referred  to  are  those  which  touch  the  firm's 
relations  with  its  public.     This  executive  from  time  to 


22 AT    THE    MANAGER'S    DESK 

time  inspects  his  shipping  room  and  returned  goods  de- 
partment in  order  to  get  at  the  causes  that  lie  behind 
complaints,  misshipments  and  damaged  goods.  Another 
millionaire  owner  is  known  to  have  claimed  in  person  re- 
wards offered  to  customers  who  detect  a  blunder  on  the 
part  of  the  salespeople  in  the  arrangement  of  stock.  A 
third  proprietor  makes  a  cross-section  study  of  his  busi- 
ness by  getting  down  early  Monday  morning  and  going 
over  the  two  days'  mail  in  detail. 

KEEP  your  eye  on  the  distinctive  service  you  are  render- 
ing to  the  public — watch  the  road  ahead  and  plan 
for  the  greater  future  of  your  business. 

Among  the  vital  functions  of  management  are  these: 
to  decide  finally  what  the  public  demands ;  to  know  what 
is  given  them  in  goods  and  service ;  to  bring  future  de- 
mand and  supply  into  harmony ;  to  focus  into  a  policy 
the  workmanlike  care  of  the  production  chief,  the  credit 
man's  distaste  for  risks;  the  collection  manager's  temp- 
tation to  collect  money  at  the  sacrifice  of  friendship ;  the 
salesman's  tendency  to  get  orders  regardless  of  final 
satisfaction.  As  subordinates  come  and  go,  your  busi- 
ness can  not  keep  on  an  even  keel  unless  you  balance  all 
the  different  forces  in  action  and  hold  to  a  steady  course. 
Find  out,  therefore,  why  you  are  in  business.  What  is 
your  special  right  to  expect  trade?  Why  should  pros- 
pects come  to  you  rather  than  to  your  competitor? 
What  classes  do  you  expect  to  serve  and  how?  Almost 
every  enterprise  has  been  built  on  a  service  idea — the 
Wanamaker  one-price  retail  plan,  the  Butler  one-price 
wholesale  service  by  mail,  the  unit  idea,  the  department 
store  policy  of  convenience,  the  Marshall  Field  axiom 
that  "the  customer  is  always  right." 

If  you  get  a  definite  basis  for  your  business,  it  will 


MANAGEMENT    ESSENTIALS 28 

not  be  hard  to  organize  your  accounting,  cost  keeping, 
orders,  complaints  and  testimonials,  so  that  from  day  to 
day  you  will  know  whether  your  policy  is  still  right  and 
if  you  are  still  selling  satisfaction.    . 

Beyond  the  policies  of  your  business,  out  of  the  analy- 
sis of  past  trade,  looms  the  biggest  job  for  the  man  at 
the  manager's  desk — watching  the  road  ahead,  charting 
progress.  You  have  busied  your  employees  with  detail — 
make  sure  that  you  plan  ahead.  The  big  lines  of  policy 
and  control  which  focus  at  your  desk  lead  out  from 
yesterday  into  the  tomorrows,  and  only  the  man  who  has 
them  in  their  proper  perspective  can  plan  for  the  future. 

One  manager  keeps  on  his  desk  maps  and  plans  which 
require  years  to  work  out — the  raw  material  of  future 
business.  When  he  has  tested  them  in  all  his  moods  and 
has  worked  out  the  capital  backing,  the  customer  de- 
mand and  the  proper  employees  for  detail  control,  he 
sets  itemized  quotas  for  every  man  in  his  business;  to 
which  quotas  in  several  years  no  employee  has  failed  to 
measure  up  in  total  and  item  by  item.  He  has  gained 
his  men's  confidence  by  sound  judgment  and  successful 
campaigning — has  established  himself  in  leadership  by 
long  hours  of  poring  over  policies,  financial  and  labor 
conditions,  credits,  competition  and  opportunities  of 
service. 

Management  is  not  only  the  hardest  problem  in  busi- 
ness, but  the  problem  that  comes  nearest  to  the  secret 
of  failure  and  success.  Up  at  the  top  of  every  business 
— at  the  apex  of  its  pyramid  of  functions — sits  some  one 
to  whom  all  lines,  wires  and  paths  of  communication 
lead;  where  focus  problems,  records  and  plans;  from 
whom  radiate  the  spirit,  the  policies  and  the  initiatives 
which  are  to  write  in  the  future  of  the  enterprise.  No 
other  desk  is  so  hard  to  fill,  because  no  other  man  must 


24 AT    THE    MANAGER'S    DESK 

be  so  well  rounded  and  evenly  poised. 

No  special  knack  or  ability  will  make  a  manager 
without  self -training  and  use  of  the  abilities  of  (others. 
List,  group  and  analyze,  therefore,  the  work  that  fills 
the  calendar  of  successful  managers — that  goes  on  at 
your  own  desk.  Reduce  your  detail  to  system  and 
assign  it  to  subordinates.  Find  out  what  fact,  what 
tendency  expressed  in  a  dozen  letters,  conferences  or  sets 
of  figures  tells  you  something  vital — get  that  point  and 
delegate  the  rest.  The  subject  matter  of  your  day  may 
be  different  as  your  business  passes  from  the  little  shop 
through  the  transition  stage  where  it  is  too  big  for  inti- 
mate daily  supervision  and  finally  into  a  strong  corpora- 
tion. The  witness  of  successful  managers  is,  however, 
that  at  every  stage  they  are  outside  of  and  bigger  than 
their  business — above  it,  and  in  control. 


# 


/""♦APTAINS  of  industry  must  have  capacity  for  detail, 
^  though  they  must  not  devote  too  much  time  to  that.  For 
while  it  is  the  intimate  knowledge  of  details  which  will  enable 
them  wisely  to  decide  the  larger  problems,  yet  if  too  much  at- 
tention be  given  to  detail  the  danger  is  that  they  will  become 
so  absorbed  in  the  petty  details  that  they  cannot  get  far  enough 
away  from  them  to  see  the  larger  problems,  which  can  only 
be  seen  by  having  the  proper  perspective.  Executives  must 
not  try  to  do  too  much  themselves;  their  power  will  lie  in  dupli- 
cating themselves  by  the  selection  of  lieutenants  to  carry  out 
their  plans  and,  having  made  their  selection,  giving  to  them 
latitude  to  work  into  their  particular  problems  their  own 
personality. 

— James  Logan 

Chairman,  Executive  Board,  United  States  Envelope  Company 


II 

TAKING  YOUR  PROBLEMS 
TO  PIECES 

By  John  H.  Hanan 
President,  Hanaa  and  Son 

ANALYSIS  in  business  distinguishes  the  real  busi- 
ness man  from  the  speculator.  To  the  keen,  ana- 
lytical mind  in  business  there  is  scarcely  such  a  thing 
as  chance,  for  this  reading  of  the  future  by  analysis 
removes  the  elements  of  uncertainty  in  any  enterprise. 

In  whatever  undertaking  a  business  man  embarks  he 
may  either  plunge,  as  the  pure  speculator  does,  or  he 
may  move  deliberately,  with  a  practical  certainty  of 
what  awaits  him.  The  tyro  in  business  is  ruled  by  im- 
petuosity ;  the  conservative  and  calculating  man  in  busi- 
ness governs  all  his  acts  with  an  intelligent  regard  for 
cause  and  effect.  Sometimes  we  hear  it  said  that  Smith, 
for  instance,  has  a  veritable  second-sight,  and  that  what- 
ever he  undertakes  turns  into  gold  as  if  by  magic.  If 
we  study  Smith,  however,  we  will  find  that  his  magic 
is  only  logic — and  knowledge  of  human  nature. 

The  business  speculator  leaps  in  the  dark;  the  real 
business  man  never.  The  speculator  may,  perhaps,  alight 
on  his  feet,  but  there  are  nine  chances  in  ten  that  he  will 
come  down  flat.  The  man  who  makes  business  a  science 
studies  out  his  moves  as  if  he  were  playing  a  game  of 
chess.  Business,  after  all,  is  nothing  less  than  a  science. 
It  is  a  gamble  to  many  men  because  they  choose  to  make 
it  so. 


26 AT    THE     MANAGER'S    DESK 

Why  are  so  many  big  mistakes  made  in  business  ?  Be- 
cause the  average  business  is  too  haphazard. 

Forty  years  ago  I  was  impressed  with  the  value  of 
analysis  in  business,  and  that  hour  was  the  beginning  of 
whatever  success  I  have  had.  My  father  had  a  small 
shoe  factory  in  New  York,  and  sent  me  out  on  the  road 
for  him. 

THOROUGH  analysis  of  his  first  failure  pointed  out 
to  John  H.  Hanan  the  "reason  why"  and  indicated 
the  way  that  led  to  his  final  success. 

The  first  town  I  visited  was  Detroit.  Equipped  with 
my  sample  case,  I  set  forth  to  conquer  the  city.  I  was 
full  of  enthusiasm.  I  knew  we  were  making  good  shoes, 
and  I  did  not  see  why  there  should  be  any  difficulty  in 
building  up  a  trade  in  the  West.  I  hadn't  done  any 
particular  analyzing  on  the  subject,  but  in  a  general  way 
it  looked  good. 

Business  men  often  go  into  enterprises  simply  be- 
cause they  look  good  on  the  surface. 

The  first  shoe  merchant  I  visited  in  Detroit  took  some 
of  the  enthusiasm  out  of  me.  It  is  a  vivid  recollection 
of  him  that  lingers  in  my  memory. 

"I  have  come  to  sell  you  a  consignment  of  Hanan 's 
shoes,"  I  said  to  him,  displaying  my  samples. 

1 '  Hanan  ? "  he  asked.    ' '  Who  is  Hanan  ? '  * 

"The  manufacturer  of  the  best  shoes  on  the  market," 
I  answered,  taken  aback. 

"I  have  never  heard  of  him,"  he  retorted.  "I  am 
buying  the  XXXX  brand  of  shoes,  and  I  don't  care  to 
experiment  with  Hanan  or  any  other  unknown  brand." 

Now,  the  XXXX  brand  was  inferior  to  my  own,  and 
I  knew  it  very  well ;  but  since  the  dealer  had  never  heard 
of  Hanan 's  there  was  little  hope  of  convincing  him.     I 


TAKING    PROBLEMS    APART 27 

went  away  without  securing  a  sale. 

The  next  call  I  made  was  a  repetition  of  the  first,  and 
so  it  went,  all  day.  When  night  came  I  was  thoroughly 
discouraged.  Nobody  in  Detroit  had  heard  of  Hanan, 
and  nobody  wanted  Hanan 's  shoes.  That  evening  I 
went  to  my  room  at  the  Russell  House  and  sat  down  to 
think. 

It  was  then  that  I  did  my  first  analyzing  of  a  business 
proposition.  "Why  was  it  that  Hanan 's  shoes  would  not 
sell  in  Detroit?  I  knew  that  we  had  better  values  to 
offer  than  XXXX,  against  whose  competition  I  had  made 
no  headway.  I  was  confident  that  we  were  making  better 
shoes  than  any  of  the  manufacturers  who  had  possession 
of  the  Detroit  field,  and  yet  the  dealers  had  only  laughed 
at  me. 

I  went  over  the  whole  proposition  of  business  success. 
Mentally,  I  opened  an  account  with  "The  Future  of 
Hanan 's  Shoes."  I  weighed  all  the  elements  that  were 
to  add  to  or  subtract  from  that  future.  It  was  a  sort 
of  ledger  account  that  I  had  in  my  mind — an  account 
covering  the  future,  instead  of  the  past.  There  were 
many  debits  and  credits,  if  I  may  call  them  such,  com- 
prising every  argument  I  could  work  out. 

I  took  up  a  pair  of  sample  shoes  and  looked  them  over. 
I  was  proud  of  them,  and  I  knew  perfectly  well  that  the 
trouble  did  not  lie  in  the  shoes  themselves,  nor  did  it 
lie  in  lack  of  people  to  buy  them.  The  market  was  there 
in  the  West;  the  problem  was  to  get  into  that  market 
and  stay  in  it.  When  I  struck  a  mental  balance  in  my 
account  with  the  future  there  was  one  thing  that  stood 
out  prominently.  It  was  the  value  of  a  reputation. 
Analysis  had  reduced  conditions  to  one  factor :  that  busi- 
ness success  comes  from  having  a  reputation. 

This  may  seem  a  simple  proposition  to  reason  out, 


28 AT    THE     MANAGER'S    DESK 

yet  there  are  a  lot  of  business  establishments  that 
haven't  done  this  bit  of  analysis. 

However,  I  carried  my  analysis  of  the  future  further 
than  this.  Having  decided  that  what  my  shoes  needed 
was  a  reputation,  I  formulated  a  policy  that  very  hour 
from  which  I  never  have  allowed  myself  to  depart  to 
this  day.  Up  to  that  time  our  goods  had  borne  no  brand. 
There  was  nothing  on  them  to  indicate  that  they  were 
Hanan's.  I  now  resolved  that  every  pair  of  shoes  that 
left  our  factory  should  be  branded  with  our  name — not 
only  once,  but  several  times,  and  on  various  parts  of  the 
shoe.    They  should  be  marked  indelibly. 

I  don't  know  of  anything  in  my  business  life  that  has 
been  of  more  value  to  me  than  the  analytical  study  I 
made  that  night  of  the  future  of  Hanan's  shoes,  and 
the  fixed  policy  that  followed  it.  It  was  an  analysis 
based  on  human  nature,  and  its  logic  has  been  demon- 
strated countless  times.  On  numerous  occasions  I  have 
had  to  fight  against  influences  tending  to  cause  a  devia- 
tion from  this  policy,  but  I  have  resisted  them  stead- 
fastly. For  example,  I  was  once  offered  an  order  for 
a  sum  that  may  seem  fabulous,  one  hundred  thousand 
dollars,  if  I  would  leave  the  Hanan  brand  off  my  goods 
and  permit  the  use  of  certain  dealers'  names  instead. 
These  offers  only  proved  the  truth  of  my  reasoning.  If 
the  brand  was  worth  a  hundred  thousand  dollars  an  or- 
der to  others,  it  was  worth  more  than  that  to  me. 

When  I  received  these  generous  propositions  I  had  oc- 
casion to  look  back  with  satisfaction  to  that  night  in 
Detroit,  when  I  analyzed  the  future  and  put  a  correct 
estimate  on  the  worth  of  our  name  stamped  in  our  shoes. 

Whatever  a  man's  business  and  whatever  the  propo- 
sition that  confronts  him,  he  can  get  right  down  to  the 
fundamentals  of  the   thing  if  he  chooses,   eliminating 


TAKING  PROBLEMS  APART 29 

I 

to  a  large  degree  the  element  of  guess  that  makes  some 
undertakings  so  uncertain.  Many  businesses  have  vacil- 
lating policies.  This  is  merely  an  indication  that  analy- 
sis of  the  future  is  lacking. 

PROJECT  the  analysis  of  your  problems  into  the  future 
— study  men  and  methods,  and  open  a  ledger  account 
with  the  tomorrow  of  your  business. 

A  business  may  be  conducted  systematically  so  far  as 
concluded  transactions  are  concerned,  and  yet  may  be 
entirely  unsystematic  when  it  comes  to  transactions  con- 
templated. It  is  well  to  discriminate  carefully  in  this 
connection. 

Are  you  in  the  habit  of  applying  the  same  degree  of 
analysis  to  the  undertakings  you  are  planning  as  you 
do  to  the  undertakings  that  have  gone  into  history  and 
been  recorded  in  your  ledgers?  Perhaps  you  never 
thought  of  the  matter  in  this  light.  You  have  studied 
bookkeeping  systems  and  modern  ideas  for  keeping  and 
tabulating  business  information  concerning  your  daily 
acts,  but  it  may  be  that  you  never  opened  an  account 
with  the  future.  It  is  more  difficult  to  analyze  the  fu- 
ture than  the  past,  but  in  some  respects  it  is  even  more 
essential. 

You  can  take  your  ledgers  and  from  them  tabulate  the 
facts  and  figures  that  went  to  make  your  success  or  fail- 
ure. You  can  group  these  statistics,  arrange  them  in 
brackets,  and  reduce  them  to  analysis  of  the  minutest 
detail.  If  you  study  all  the  ramifications  of  this  detail 
and  trace  each  result  back,  logically,  to  its  cause,  you 
will  learn  whence  came  your  success  or  lack  of  success. 
You  will  find,  too,  that  in  all  your  processes  of  analysis 
every  result  was  built  practically  on  some  attribute  of 
human  nature — either  in  yourself,   in  the  people  who 


SO AT    THE    MANAGER'S    DESK 

bought  your  goods,  or  in  your  competitors.  "While  you 
have  been  analyzing  your  business  you  have  been  analyz- 
ing humanity. 

Reverse  the  process.  Project  the  analysis  into  the 
future,  and  see  if  you  can  dissect  the  causes  that  are  to 
produce  results  for  you  during  the  coming  year.  Re- 
lentlessly cut  out  prejudice  and  your  own  desires  and 
inclinations.  Keep  your  analysis  down  to  the  bed-rock 
of  human  nature.  Don 't  soar  above  the  heads  of  human- 
ity. Of  course,  you  may  have  elements  to  consider  that 
did  not  enter  into  your  analysis  of  completed  undertak- 
ings, but  to  all  intents  you  will  have  to  take  into  account 
the  same  immutable  laws  of  mankind. 

Open  a  mental  ledger  account  with  the  future,  or,  if 
you  prefer,  tabulate  your  analysis  on  paper.  Enter- 
prises reduced  to  cold  facts  and  figures,  and  transcribed 
in  black  and  white,  often  appear  different  from  enter- 
prises pictured  to  you  in  the  glowing  words  of  a  pro- 
moter. The  imagination  governs  many  an  undertaking, 
which,  if  reasoned  out  in  the  remorseless  logic  of  mathe- 
matics, would  resolve  itself  into  its  true  components. 
In  your  completed  transactions  it  is  your  bookkeeping 
that  searches  out  for  you  the  mistakes  and  hidden  leaks. 
So,  too,  the  detail  of  your  analysis  of  the  future  will 
indicate  to  you  the  points  where  impulsiveness  and  rea- 
son diverge. 

Analysis  of  men  will  write  the  fate  of  their  businesses 
as  plainly  as  if  shown  by  prophecy.  Yet  those  meu 
themselves  will  fail  to  see  it.  They  never  have  cultivated 
the  quality  of  analysis;  they  cannot  analyze  even  them- 
selves. To  learn  to  dissect  one's  self  is  the  first  duty 
of  every  business  man.  He  can  hardly  expect  to  read 
others  until  he  knows  himself. 

In  an  advertising  proposition  the  value  of  this  ele- 


u TAKING  PROBLEMS  APART 31 

ment  of  analysis  is  often  seen  to  good  advantage.  I 
have  been  confronted  with  it  many  times.  When  a  busi- 
ness man  goes  into  an  advertising  campaign  of  big  pro- 
portions he  is  simply  analyzing  the  future  and  staking 
his  money  on  the  accuracy  of  his  dissection  of  human 
kind.  He  casts  up  his  knowledge  of  the  market  and  his 
conclusions  concerning  human  nature,  and  invests  his 
money  on  the  result.  "Clever  advertising,"  we  hear  it 
called  sometimes.  It  is  effective  simply  because  it  is 
advertising  based  on  the  fundamental  laws  of  life.  Ap- 
ply the  same  rules  to  all  departments  of  a  business  and 
you  will  get  results  equally  as  good. 

There  may  be  instances  in  which  successful  advertis- 
ing campaigns  have  been  managed  in  the  way  a  grain 
speculator  buys  wheat,  but  I  do  not  recall  any.  The 
successful  advertising  man  is  analytical  to  the  extreme, 
projecting  every  result  from' a  definite  cause.  For  every 
proposition  he  has  a  corollary;  every  part  of  the  plan 
must  have  its  demonstrations. 

It  is  the  habit  of  analysis  in  small  things  that  enables 
a  business  man  to  move  confidently  and  firmly  in  large 
affairs.  I  remember  that  quite  a  number  of  years  ago, 
when  I  announced  my  purpose  of  establishing  retail  shoe 
stores  from  which  I  could  sell  my  product  direct  from 
factory  to  consumer,  most  of  my  business  acquaintances 
predicted  my  speedy  downfall.  On  every  side  I  heard 
the  prophecy,  "John  Hanan  is  committing  business  sui- 
cide. He  may  know  how  to  make  shoes,  but  he  doesn't 
know  how  to  retail  them.  Why  hasn't  he  sense  enough 
to  let  well  enough  alone  ? ' ' 

At  that  time  it  was  an  unheard-of  thing  for  a  shoe 
manufacturer  to  sell  to  the  consumer.  My  acquain- 
tances believed  I  was  plunging  into  a  great  speculation, 
with  the  chances  all  against  me.    But  a  new  enterprise 


32 AT    THE    MANAGER'S    DESK 

is  not  necessarily  a  gamble  because  it  is  new.  If  it  fol- 
lows the  logical  lines  of  human  nature  and  will  bear 
this  test  of  discriminating  analysis,  it  is  just  as  legiti- 
mate a  business  undertaking  as  if  it  belonged  to  a  type 
a  hundred  years  old.  There  was  no  speculation  about 
this  enterprise.  I  had  satisfied  myself  of  the  logic  of  it 
by  analyzing  its  possibilities  into  all  their  component 
fractions.    The  results  justified  the  expenditure. 

Advice  is  something  that  business  men  get  freely,  but 
the  only  sort  of  advice  they  should  heed  is  that  which 
can  be  analyzed  into  real  logic.  If  men  advise  you  to 
do  this  or  not  to  do  that,  apply  the  scalpel  to  their  warn- 
ings. If  you  find  any  real  value  in  what  they  have  to 
offer,  incorporate  it  in  your  own  analysis.  The  original 
and  independent  business  man  is  the  one  who  makes  his 
own  analysis  true  to  nature,  and  goes  ahead. 


3j 


A  MAN  may  be  thoroughly  upright,  of  the  highest  personal 
"*"*■  character,  and  have  had  years  of  experience  in  the  very 
best  lines  of  the  undertaking  which  he  represents;  yet  if  he  has 
not  the  ability  to  discern  those  hidden  influences  which  will 
operate  for  the  success  or  failure  of  his  project,  he  is  not  a 
safe  man  as  an  associate. 

— Frederic  W.  Upham 

President,  Consumers  Company, 


Ill 

HOW  THE  EXECUTIVE 
KEEPS  IN  TOUCH 

By  Kendall  Banning 

COMPARE  the  picture  of  the  head  of  a  big  business 
concern,  on  duty  at  his  executive  desk,  to  that  of 
an  engineer,  on  duty  at  his  engine,  surrounded  by  appli- 
ances that  not  only  regulate  the  machinery  but  keep  him 
in  constant  touch  with  every  part  of  the  work  which  the 
machine  is  doing.  Compare  the  call  buttons  on  the 
executive's  desk,  his  various  telephones,  his  graphic 
record  and  organization  charts,  his  daily-duty  card  cabi- 
nets and  more  particularly  his  daily,  weekly  and  monthly 
report  folders  on  finance,  labor  and  production,  to  the 
power  and  fuel  indicators,  speedometers,  gauges  and 
controllers  of  the  engineer;  and  we  get  a  picture  of  the 
real  functions  of  a  business  executive. 

The  simile  may  be  carried  out  into  many  picturesque 
details,  up  to  this  one  all-important  point  of  compari- 
son— that  while  the  engineer  can  merely  attain  the  uni- 
form mechanical  efficiency  of  that  machine  on  a  fixed 
schedule,  the  business  executive  has  unlimited  scope  in 
the  selection  and  construction  of  his  engine  of  business, 
unlimited  choice  of  routes  and  speeds  and  unlimited 
range  of  action  and  selection  of  goals  toward  which  he 
may  drive — goals  that  are  limited  in  their  importance 
only  by  the  capacities  for  organization  of  the  guiding 
force. 


84 AT    THE    MANAGER'S    DESK 

The  business  executive,  like  the  engineer,  must  at  all 
times  have  control.  The  moment  either  loses  his  grasp, 
his  machine  is  beyond  management.  It  is  the  business 
of  both  to  see  to  it  that  their  machines  are  operating 
steadily,  that  the  various  parts  are  keeping  up  their 
work  in  harmony  with  the  others,  that  the  wastes  are 
eliminated,  that  supplies  are  available,  that  the  tracks 
are  clear.  If  either  fails  to  note  the  signals  he  will  drive 
his  engine  into  danger  just  as  surely  as  he  will  lose 
control  to  the  man  who  sees  the  signals  the  other  has 
missed  and  springs  forward  to  take  command.  Oppor- 
tunities and  dangers  come  to  the  incapable  executive 
when  he  is  unaware.  They  are  anticipated  by  the  execu- 
tive whose  systems  of  control  are  so  fine  as  to  let  him 
feel  every  throb  of  his  organization,  every  beat  of  his 
engine  of  business,  and  allow  him  to  guide  it  and  regu- 
late it  and  know  it  as  an  engineer  knows  his  machine. 

WHAT  the  executive  needs  to  know — methods  adopted 
by  the  managers  of  two  great  concerns  to  get  this 
information  speedily  but  with  absolute  accuracy. 

An  executive's  systems  for  keeping  in  intimate  touch 
with  his  business  naturally  vary  in  scope  and  complexity 
with  the  size  and  purpose  of  his  organization.  They 
range  from  his  casual  morning  chat  with  his  partner  or 
manager,  or  sole  employee,  to  detailed  written  reports 
and  charts  made  out  at  daily  and  sometimes  hourly  in- 
tervals to  show  the  specific  progress  in  dollars  or  units 
of  production  of  each  machine  of  each  factory  depart- 
ment. They  cover  every  item  of  information,  from  the 
amount  of  money  in  the  cash  drawer  to  the  percentage 
of  costs  of  pin  bolts  in  one  of  the  shops  to  their  costs  in 
years  past,  with  the  reasons  for  the  difference.  They 
come  in  forms  that  vary  from  the  shout  across  the  office 


EXECUTIVE    CONTROL 


85 


MM  l„. 

■F 

| 

s 

TTT 

1     1    !    1    I    1 

dipt    ntrcmr 

IiIiIikii|  i  i  i;i  ,. 

~~ 

; 

! 

: 

1 
I 

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. 

M 

■—•""• 

.~L.  O-.^MO.-   .....K,.,. 

J  1 1  » I  *  I  .  1  1 1  1 


FIGURE  II:    Summaries  of  the  day's  financial  and  clerical  work,  sales 

made  and  orders  shipped — these  are  the  things  the  executive  needs  in  brief 

shape,  and  the  six  simple  forms  here  shown  quickly  supply  him  with  that 

information 


36 AT    THE    MANAGER'S    DESK 

to  elaborate  charts  in  colors  that  show  in  graphic  form 
the  increase  and  decrease  of  a  subdivision  in  specific 
detail.  The  simplest  form  is  sometimes  the  best.  Re- 
ports that  are  too  complicated  are  as  inimical  to  real 
system  as  reports  that  are  careless  and  incomplete.  The 
best  channels  of  information  are  those  that  present  the 
most  vital  facts  in  the  most  direct  form,  that  eliminate 
the  extraneous  detail  and  attain  their  purpose  in  the 
most  economical  manner,  on  precisely  the  same  prin- 
ciple that  a  straight  line  is  the  shortest  distance  between 
two  points.  The  fewer  these  points  are  in  number  the 
simpler  the  work  of  the  executive  naturally  becomes,  but 
the  number  must  not  be  reduced  to  the  elimination  of 
facts  that  affect  his  efficiency. 

Specifically,  what  are  these  facts? 

For  purposes  of  illustration,  the  main  channels  of  in- 
coming information  may  be  classified  thus: 

1.  Finance 

2.  Correspondence 

3.  Sales 

4.  Mechanical  Equipment 

5.  Labor 

REPORTS  that  keep  the  manager  of  the  large  busi- 
ness in  close  touch  with  the  day-to-day  and  month-to- 
month  efficiency  of  his  sales  and  operating  departments. 

The  fundamental  information  that  is  of  prime  im- 
portance to  the  smallest  as  well  as  to  the  largest  concern 
is  the  amount  of  cash  on  hand.  The  little  shopkeeper  as- 
certains this  information  by  a  glance  at  the  contents  of 
the  till.  The  larger  executive  gets  it  by  balancing  his 
bank  book.  The  general  manager  finds  the  information 
on  a  slip  of  paper  handed  to  him  by  his  cashier  or  book- 
keeper.    The  head  of  a  big  corporation  gets  it  on  a 


EXECUTIVE    CONTROL 


37 


report  form  made  out  every  night  to  show  the  exact 
balance  in  every  bank  in  which  the  corporation  has  an 
aecount,  bills  receivable,  bills  payable,  securities  owned 


ESTIMATE  OF  OBLIGATIONS 

AVERAGE 

AVERAGE 

FACTORY  WAGES 

OFFICE  AND  MISC.  SALARIES 

ADMINISTRATIVE  SALARIES 

ROYALTIES 

NOTES  PAYABLE;  DISCOUNT   AND  INTEREST 

DIVIDENDS,  COMMON 

DIVIDENDS,  PREFERRED 

OISTRICT  MANAGERS 

COMPANY    SALESMEN  AND  COMPETITION 

TRAVELING  REPAIRMEN 

DISTRICT  INSTRUCTORS 

MISCELLANEOUS  TRAVELING 

POSTAGE 

TELEGRAPH  AND  TELEPHONE 

RECORDING  ORDERS 

CASH  REFUNDED 

CANADIAN  FACTORY 

CANADIAN  DUTIES 

BUILDING  CONTRACTS  AND  MATERIAL 

MACHINERY  TOOLS  AND  FIXTURES 

RAW  MATERIALS  AND  SUPPLIES 

REMITTANCES  TO  AGENTS 

PURCHASEO  REGISTERS 

RENTS.  TAXES  AND  INSURANCE 

FREIGHTS 

ADVERTISING 

WELFARE  WORK 

MISCELLANEOUS 

TOTAL 

GAIN  THIS  MONTH 

COLLECTIONS 

LOSS 

ESTIMATE 

RECEIVED 

PURCHASES  FOR  MO. 

BAL.                                                                                            1ST      * 

1ST      S 

FACTORY  OUTPUT                                                          REGISTERS 

FIGURE  III:     This  is  a  multiple  blackboard  ruled  to  show  the  financial 
condition  of  the  firm  by  months  and  the  status  of  each  department.     It  may 
be  concealed  from  view  by  a  door,  and  locked, 

and  their  prices  for  the  day,  and  other  financial  data, 
which  is  laid  upon  his  desk  every  morning  by  the  head 
of  his  financial  department.    This  information  is  vital 


38 


AT    THE    MANAGER'S    DESK 


to  the  humblest  as  well  as  to  the  greatest  executive.  It 
allows  both  to  plan  their  business  days  so  that  their 
obligations  may  be  met  and  their  credit  maintained. 

Next  in  importance  is  the  daily  mail.     The  mail  con- 
tains  inquiries,    orders,    money,  complaints,  reports — 


1 

SALES    JUNE  1-15.     ( 

1       ;       i       |       |       4       |       |       |       |  =3 

"0 

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NO.  3 

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FIGURE  IV:  This  chart  helps  L.  C.  Bliss,  President  of  the  Regal  Shoe 
Company,  icatck  his  business.  The  "stair  steps"  indicate  the  sales  in- 
crease in  each  store,  and  its  relation  to  the  average  increase  from  all  stores 

matters  on  which  the  work  of  the  organization  rests,  the 
fuel  with  which  the  engine  is  run.  If  the  mail  is  small, 
the  executive  opens  it  and  attends  to  the  contents  him- 
self, or  marks  each  letter  for  reference  to  individuals  or 
departments.  If  the  mail  is  heavy  and  the  firm  is  large 
the  mail  goes  to  the  mail  clerk  or  to  the  correspondence 
department  for  similar  distribution  and  a  report  is  made 
to  the  executive  head.  'This  correspondence — the  incom- 
ing and  the  outgoing  mail — is  the  pulse  of  the  firm's 
progress  with  the  outside  world.    The  closer  an  execu- 


EXECUTIVE    CONTROL 


39 


tive  is  in  touch  with  this  pulse,  the  quicker  he  can  de- 
tect fluctuations  and  direct  accordingly. 

Orders  and  sales  are  the  easiest  items  for  an  executive 
to  record.  Mr.  Bliss  of  the  Regal  Shoe  Company  gets 
his  record  in  chart  form. 

For  example,  one  chart  (Figure  IV)  shows  the  semi- 
monthly records  of  sales.  It  is  divided  into  latitudinal 
sections  to  represent  the  numbered  stores  in  the  Regal 
chain.  This  method  of  division  can  just  as  well  be  used 
for  the  departments  in  a  single  store.  The  figures  in  the 
left  column  measure  the  increase  or  decrease  in  the  sales 
of  any  one  of  the  stores.     The  store  which  shows  the 


FIGURE  V:  A  typical  graph  by  which  a  manufacturer  checks  over  en- 
gine room  troubles.  The  three  black  lines  represent  the  steam  plant,  the 
factory  equipment  and  the  gas  engines;  the  squares  stand  for  intervals  of 
time.  As  soon  as  there  is  a  shut  down  for  repairs,  the  line  is  broken  and 
an  explanation  written  alongside 


greatest  sales  appears  at  the  left,  the  store  with  the 
smallest  sales  at  the  right.  The  result  is  a  line  broken 
into  "steps"  representing  the  relative  position  of  the 
stores'  sales.     The  season's  increase  is  also  given  and 


40 AT    THE    MANAGER'S    DESK 

the  average  for  all  of  the  stores. 

A  more  personal  system  of  keeping  an  executive  in- 
formed of  the  work  of  his  departments  is  used  by  John 
H.  Patterson,  the  head  of  the  National  Cash  Register 
Company.  This  executive  practically  makes  the  depart- 
ment come  to  him  and  explain  in  the  person  of  its  head 
what  it  is  doing.  For  this  purpose,  each  department 
is  equipped  with  a  folding  blackboard  containing  one 
or  two  dozen  leaves.  Each  leaf  or  page  is  numbered  and 
reserved  for  information  concerning  the  various  duties 
of  that  department.  Its  output,  its  expenses,  its  changes 
in  personnel,  its  suggestions  for  improvements,  and  its 
accomplishments  and  obligations  are  written  thereon 
daily.  A  glance  through  the  leaves  shows  the  status  of 
work.  These  blackboards  are  attached  to  the  walls  of 
the  departments.  At  the  command  of  the  executive  they 
are  transferred  to  the  wall  of  the  president's  office,  and 
inspected  and  dissected  by  him  with  the  assistance  of 
the  department  head. 

The  statistics  of  each  department  are,  of  course,  re- 
corded in  regular  form;  the  blackboard  scheme,  how- 
ever, enables  the  executive  to  get  at  once  from  the  head 
of  each  subdivision,  a  direct  and  intimate  review  of  pres- 
ent conditions  and  plans  for  the  future  that  do  not 
appear  in  the  company's  records. 

The  systems  for  keeping  the  executive  in  touch  with 
the  mechanical  equipment  of  his  plant,  especially  in  a 
manufacturing  organization,  so  closely  resemble  the 
mechanical  appliances  that  keep  an  engineer  informed 
of  the  workings  of  his  engine  as  to  amount  practically 
to  the  same  thing.  The  self -registering  charts  attached 
to  the  latter  are  permanent  fixtures ;  in  the  case  of  the 
executive  they  are  sent  to  his  office.  From  them  he 
learns  of  the  power  being  used,  the  amount  of  fuel  con- 


EXECUTIVE    CONTROL 41 

sumed,  the  productive  power  per  unit  of  fuel,  the  pro- 
ductive power  of  each  machine  and  of  each  employee.  A 
striking  example  of  such  an  indicator-chart  is  shown 
in  Figure  V.  It  enables  an  executive  in  a  large  manu- 
facturing concern  to  check  engine  room  troubles  by 
glancing  at  three  lines.  These  lines  run  over  squares 
each  representing  ten  minutes,  horizontally,  and  a  day, 
vertically.  When  everything  is  running  smoothly,  an 
office  assistant  draws  in  an  unbroken  line.  But  as  soon 
as  any  of  the  machinery  gets  out  of  order,  the  line 
breaks  and  goes  off  at  a  right  angle  until  the  repairs 
are  completed.  An  explanation  of  the  delay  is  written 
over  every  break  in  the  line — the  executive  can  check  and 
correct  negligence  or  incompetence  at  once. 

Keeping  in  touch  with  labor  is  one  of  the  most  diffi- 
cult tasks  of  the  executive.  The  mechanical  record  of 
labor — the  number  of  employees,  the  pay  roll,  their  dis- 
tribution among  departments — these  are  simple  items  to 
tabulate.  But  human  toil  cannot  be  adequately  ex- 
pressed by  typewritten  numbers.  The  results  of  it  may 
often  be  written  in  definite  figures  that  record  the  sales 
or  the  products  of  a  plant,  but  more  often  a  falling  off 
or  increase  in  business  cannot  be  specifically  credited  to 
this  one  factor.  Hence  labor  is  handled  not  so  much  by 
the  mechanical  and  impersonal  routine  of  card  records 
and  report  sheets,  but  rather  by  the  less  formal  and 
more  human  element  of  personal  contact. 

One  way  of  getting  this  acquaintance  is  through  com- 
mittee meetings.  Another  medium  for  personal  contact 
is  the  executive's  private  office.  Many  a  threatened  dis- 
turbance has  been  calmed  in  the  quiet  seclusion  of  the 
president's  office  while  chatting  as  man  to  man  over  a 
cigar,  and  many  an  idea  has  been   planted  that  has 


42 AT    THE    MANAGER'S    DESK 

borne  golden  fruit  that,  but  for  personal  contact,  would 
have  been  unsown. 

The  charts  and  diagrams  and  report  sheets  and  indices 
that  make  up  the  mechanical  routine  of  communication 
between  the  business  executive  and  his  organization 
compare  with  the  recording  devices  that  furnish  figures 
to  the  engineer  about  his  engine.  But  both  business  ex- 
ecutive and  engineer  must  know  how  to  act  upon 
them,  must  know  the  machine's  condition,  its  possibil- 
ities, its  resources.  It  is  to  give  this  intimate  personal 
acquaintance  that  these  nerve-like  systems  of  communi- 
cation are  devised — systems  that  vary  in  size  and  scope 
with  the  size  and  scope  of  the  business  machine — and  of 
the  engineer. 


<$ 


TN  THIS  day  of  great  industries,  a  thorough  knowledge  of 
*  the  smallest  details  of  a  business  could  not  be  secured  in 
the  old  ways  of  knowing  simply  through  the  process  of  doing. 
There  are  too  many  details.  The  business  man  today  must 
have  facilities  by  which  knowledge  of  details  will  come  to  him 
automatically. 

— Edwin  A.  Potter 

President,  American  Trust  and  Savings  Bank 


PART  II— MANAGING  MEN, 
MONEY  AND  DETAIL 

Work  and  Wages 

HTHE  money  value  of  an  employee  to  a  business 
*■  is  determined  by  two  factors:  first,  his  mar- 
ket value  (fluctuating  according  to  labor  supply 
and  demand) ;  second,  his  proportion  in  the  cost 
of  doing  business. 

You  must  pay  him  his  market  value  or  you 
cannot   keep   him. 

After  the  cost  of  material  and  manufacture,  it 
is  estimated  that  the  cost  of  doing  business 
varies  from  twelve  and  a  half  to  twenty-five  per 
cent.  If  a  wage  earner  fits  into  this  cost  he  has 
a  money  value  to  the  firm.  If  his  proportion  of 
the  entire  cost  of  doing  business  is  too  high,  he  is 
an  expense.  The  individual's  money  value  is 
easily  determined  by  his  proportional  output  or 
by  what  others  pay  for  equal  skill. 

The  pay  roll  is  usually  an  index  to  efficiency. 
Pay  a  man  what  hs  is  worth,  and  he  will  work 
for  his  wages;  give  him  more,  and  he  will  work 
for  you.  As  a  rule,  an  employee  is  as  valuable 
to  the  business  as  the  business  is  to  him. 


USY-JL' 


.CLARENCE  S.  FUNK 

President  and  General  Manager,  M.  Rumely  Company 
Formerly  Generul  Manager,  International  Harvester  Company 


IV 

TRAINING  MEN  FOR 
LEADERSHIP 

By  Frederick  A.  Delano 
Receiver  and  Former  President,  Wabash  Railroad 

IN  EVERY  line  of  work,  there  is  what  may  be  termed 
the  jealousy  of  craft.  A  man  says  to  himself :  "Why 
should  I  teach  Smith  how  to  do  my  work  ?  I  have  spent 
a  lifetime  in  learning  the  business,  and  now  if  I  take 
Smith  as  an  understudy,  he  will  crowd  me  out  of  my  job 
in  a  few  months."  He  neglects  to  see  that  his  value 
will  be  judged  not  by  his  own  unaided  work  but  by  that 
of  the  staff  over  which  he  presides. 

Railroad  managers  realize,  I  believe,  perhaps  to  a 
greater  extent  than  executives  in  any  other  line  of  busi- 
ness, the  importance  of  developing  the  inner  phases  of 
an  organization.  As  a  matter  of  fact,  the  argument  of 
the  one-man  executive  is  fallacious.  If  he  really  be  a 
competent  man,  his  own  advancement  is  hastened  by 
having  material  under  him  trained  to  assume  his  duties. 

I  am  inclined  to  think,  too,  that  the  progressive  rail- 
road company  of  today  has  an  organization  better 
equipped,  more  self-sustaining  and  self-perpetuating, 
than  the  average  business  house.  It  has  available  more 
human  material,  trained  as  understudies  to  numerous 
executive  offices,  than  the  average  merchant  or  manu- 
facturer. 

In  years  past,  this  was  not  the  case,  but  the  day  of. 
the  one-man,  one-executive  railroad  is  gone.    While  there 


46 MEN,    MONEY    AND    DETAIL 

may  be  many  instances  in  which  railroads  have  not  fol- 
lowed the  trend  in  this  respect,  there  is  certainly  a 
marked  tendency  to  build  organizations  of  many  indi- 
vidual forces,  instead  of  a  few.  The  president  does  not 
consider  himself  the  railroad,  as  he  once  did ;  no  general 
executive  holds  his  place  by  virtue  of  being  the  only  man 
in  the  organization  who  knows  how  to  handle  the  work. 
There  have  been  broadening  influences  among  the  rail- 
roads that  have  led  to  the  new  policy  of  producing  men 
competent  to  direct  in  any  emergency,  rather  than 
searching  outside  the  organization  to  secure  them. 

Some  railroads  of  this  country  have  become  very 
notable  for  the  men  produced ;  some  have  not  progressed 
so  far;  a  few  remain  narrow.  But  it  is  becoming  in- 
creasingly rare  for  a  railroad  to  go  outside  of  its  own 
organization  for  material. 

ONCE  the  manager  feared  to  lose  his  position  if  he 
familiarized  another  with  his  duties — today  leaders 
recognize  the  need  of  training  understudies. 

To  the  general  public,  the  operating  department  of  a 
railroad  is  the  railroad  itself.  It  is  the  spectacular 
thing  that  the  public  sees,  and  that  is,  indeed,  a  depart- 
ment where  the  understudy  is  imperative.  Life-and- 
death  necessities  make  indispensable  some  system  of  re- 
cruiting and  training  competent  men  who  will  be  avail- 
able in  any  emergency. 

The  nature  of  the  business  tends  to  make  the  operating 
department  automatic  in  its  organization,  and  it  is  this 
that  causes  a  railroad  to  move  along  smoothly  no  matter 
who  quits  or  dies  suddenly.  There  can  be  no  shutting 
down,  no  delay  in  sending  out  trains,  no  waiting  a  day 
or  two  until  somebody  can  be  hired  from  outside.  A! 
railroad  never  stops. 


TRAINING    EXECUTIVES 47 

If  it  is  a  good  thing  for  the  operating  department  to 
develop  its  own  material,  it  is  equally  good  for  the 
traffic  department  and  the  audit  department ;  indeed,  for 
any  department  where  smoothness,  economy,  or  progres- 
sive development  is  desired. 

Most  of  the  great  railroads  do  apply  this  system  of 
organization  to  all  departments.  The  understudy  plan, 
or  whatever  you  choose  to  call  it,  really  means  a  broad- 
ening out  of  the  organization.  Railroad  men  have  been 
broadening  themselves,  and  gaining  a  better  idea  of 
business  principles  and  the  advantages  of  a  many-man 
business.  The  growth  of  the  railroads  has  made  im- 
perative the  better-training  of  the  various  units  of  the 
organization. 

The  complexities  of  the  traffic  department  have  be- 
come so  great  that  they  require  the  highest  degree  of 
familiarity.  Where  once  a  railroad  found  a  small 
pamphlet  sufficient  to  contain  its  tariffs,  today  volumes 
as  big  as  a  city  directory  are  needed.  And  so  this  sys- 
tem of  understudies  has  spread  from  the  operating  de- 
partment to  all  other  departments  of  the  railroad. 

There  are  two  ways  of  filling  an  executive's  position. 
The  executive  may  assume  all  the  functions,  knowledge 
and  wisdom  himself,  distributing  none  of  the  responsi- 
bility and  developing  none  of  the  capacity  of  the  staff 
about  him.  Or,  on  the  other  hand,  he  may  act  simply  as 
a  leader  to  inspire,  enthuse,  encourage? — having  con- 
stantly in  mind  the  development  of  the  capacities  of  the 
men  under  him.  The  theory  of  this  method  is  that  the 
intelligent  effort  of  a  group  of  men  working  in  harmony 
and  on  an  intelligent  system,  is  sure  to  accomplish  more 
than  the  brains  of  one  man  unaided  possibly  can. 

I  recall,  as  a  case  in  point,  a  little  advice  that  was 
offered  an  official  of  the  Burlington  when  I  was  with 


48 MEN.     MONEY    AND    DETAIL 

that  railroad.  He  had  been  advanced  rather  fast  along 
a  somewhat  unusual  line  of  promotion — first  from  the 
shops  to  the  telegraph  department,  and  then  to  the 
superintendency  of  an  important  division.  When  he  as- 
sumed the  latter  office  an  official  of  long  experience  said 
to  him: 

"You've  got  a  new  machine,  but  it's  running  all 
right.  Don't  stop  it  until  you  know  how  to  start  it 
again." 

YOUNG  men  are  taken  into  the  organization  of  the 
railroad  and  trained  gradually  to  assume  the  duties 
and  responsibilities  of  higher  positions. 

A  railroad  or  a  well-organized  business  may  run  along 
almost  indefinitely  of  its  own  momentum.  A  new  ex- 
ecutive, unfamiliar  with  the  machinery,  comes  along  and 
imagines  that  his  duty  is  to  stop  the  machine,  upset  the 
organization,  create  reforms  on  the  instant,  and  then 
start  the  thing  again  with  a  new  and  untried  load.  Here 
the  advantage  of  the  understudy  comes  in.  He  has 
grown  gradually  into  his  position ;  he  knows  all  the  facts 
and  influences  governing  his  work.  He  is  cautious,  yet 
sure  of  the  real  needs  of  the  position.  Even  in  the  law 
department  of  a  railroad  this  rule  of  understudies  is 
general.  Most  general  counsels  are  now  developed  in 
this  way,  rather  than  by  the  old  plan  of  going  outside 
for  lawyers  with  brilliant  records,  perhaps,  but  without 
railroad  training.  The  advantage  of  this  may  be  im- 
agined when  one  reflects  that  the  general  counsel  of  a 
railroad  corporation  is  the  head,  not  merely  of  one  law 
office,  but  of  perhaps  a  hundred,  in  states  having  vary- 
ing statutes.  The  lawyer,  however  able,  called  upon 
suddenly  to  assume  charge  of  complicated  legal  affairs 
in  a  widely  scattered  territory,  must  do  so  to  a  great 


TRAINING    EXECUTIVES 49 

disadvantage  to  himself  and  the  company. 

The  business  of  recruiting  and  training  understudies, 
then,  is  one  of  the  most  important  undertaken  by  a  rail- 
road executive — and  one  to  which  the  higher  official  must 
give  increasing  attention.  In  a  well-organized  railroad, 
these  higher  officials,  in  addition  to  lending  their  moral 
support  to  the  policy,  are  often  actively  on  the  lookout 
for  capable  understudies.  They  are  always  on  the 
watch  for  ability,  and  eager  to  foster  it  for  the  benefit 
of  the  organization. 

For  illustration,  take  the  train-dispatching  depart- 
ment. In  such  an  important  branch  of  a  railroad's  oper- 
ation, it  must  be  somebody's  unfailing  duty  to  provide  a 
supply  of  competent  men  who  will  be  available  instantly 
when  called  upon.  As  a  rule  this  falls  upon  the 
shoulders  of  the  division  superintendent  and  his  chief 
lieutenants,  the  train  master  and  chief  dispatcher. 

These  men  are  continually  on  the  watch  for  young 
operators  who  show  themselves  to  be  quick,  alert,  clear- 
headed. When  recruits  are  found  they  are  perhaps 
working  on  remote  and  unimportant  branches.  They  are 
advanced  to  divisions  of  more  consequence  and  responsi- 
bility, and  in  due  time  become  dispatchers  on  branches, 
or  assistant  dispatchers  in  the  main  offices.  Duties  grow 
upon  them  as  understudies,  and  when  something  happens 
to  thrust  one  of  them  into  full  charge,  he  assumes  the 
task  naturally  and  easily.  It  is  the  delegating  of  re- 
sponsibility to  men  by  degrees  that  makes  them  familiar 
with  it  and  develops  the  ability  to  handle  work  intelli- 
gently. 

A  superintendent  may  be  developed  from  various 
sources.  Some  railroads  consider  of  chief  importance 
the  ability  to  move  trains,  and  on  roads  where  this  idea 
prevails,  the  superintendent's  understudy  advances  from 


50 MEN.     MONEY    AND    DETAIL 

a  train  conductor,  a  train  master,  or  a  chief  dispatcher. 
Other  railroads  look  more  for  men  who  show  maintenance 
ability,  and  here  the  line  of  advancement  is  from  a  road- 
master  or  a  superintendent  of  tracks.  Still  other  rail- 
roads are  more  general  in  their  requirements  and  prefer 
that  the  superintendent  shall  be  a  good  business  man 
capable  of  dealing  with  the  public  and  meeting  all  ques- 
tions broadly  and  intelligently. 

This  is  merely  illustrative  of  methods  which  I  believe 
ought  to  prevail  in  all  lines  of  industry,  and  which  do 
prevail  to  a  very  large  extent  in  railroading.  Railroad 
men  of  today  are  broad-minded  and  ready  to  take  up 
the  most  advanced  policies  and  systems  by  which  their 
branch  of  activity  can  be  furthered.  The  more  men  you 
are  called  on  to  meet,  and  the  greater  the  variety  of  con- 
ditions you  encounter,  the  broader  will  be  your  handling 
of  the  problems  of  a  many-sided  organization. 

Railroad  men  do  mingle  with  many  people  and  many 
classes.  The  ramifications  of  the  railroads  are  so  ex- 
tensive that  those  who  conduct  them  can  scarcely  be  pro- 
vincials in  methods  or  views.  To  this  fact  more  than 
any  other  do  I  attribute  the  advanced  characteristics  of 
railroad  men. 


Tl/TEN  learn  only  by  the  mistakes  they  make.  An  employer 
should  expect  and  should  encourage  his  men  to  take  the 
initiative  and  make  mistakes.  Only  in  this  way  can  they 
gain  experience.  This  method  of  handling  employees  may 
be  expensive  in  its  early  stages,  but  it  is  the  only  proper  school- 
ing for  a  position. 

— Richard  W.  Sears 

Founder  Sears  Roebuck  and  Company 


THE  MONEY  END  OF 
MANAGEMENT 

By  George  H.  Cushing 

WE  MUST  have  money.  Business  we  ought  to  con- 
trol is  getting  away  from  us  because  we  haven't 
salesmen  enough  to  cover  our  territories  closely.  Or 
capital  enough,  for  that  matter,  to  extend  the  credit  new 
customers  would  demand  or  to  pay  for  the  extra  goods 
we  would  have  to  carry  in  stock.  Both  ways  from  the 
center,  we  encounter  a  need  for  more  money.  We  go 
ahead  if  we  get  it;  we  stand  still  if  we  don't." 

Satisfied  with  this  summing  up  of  the  firm's  position, 
the  selling  partner  waited  for  his  answer.  It  was  his 
daily  regret  that  orders  were  going  elsewhere  when 
they  could  so  easily  be  added  to  his  own  sales  sheet.  He 
had  begun  to  feel  his  power  as  a  merchant,  as  a  buyer 
and  seller  of  wholesale  groceries,  and  he  chafed  at  his 
partner's  inability  or  disinclination  to  finance  his  en- 
ergy. 

"Yes,  we  need  more  money,"  that  partner  agreed.  "I 
can  borrow  from  the  banks  all  you  can  use,  but  I'm  not 
sure  yet  how  much  we  should  borrow.  We  want  to  boss 
that  borrowed  capital,  not  allow  it  to  run  this  business. 

"When  a  manufacturer  sells  to  us  on  credit,  he  is 
gambling  on  our  honesty  because  much  of  what  we  buy 
is  consumed  before  the  bill  is  due.  When  we  sell  to  the 
retailer,  we  do  the  same  thing.    If  a  bank  should  lend 


52 MEN,     MONEY    AND    DETAIL 

us  money  before  we  have  worked  out  a  sound  financial 
program  and  shaped  our  sales  and  credit  policies  to  fit 
it,  that  also  would  be  speculation — speculation  in  the 
honesty  and  ability  of  two  men;  the  difference  between 
good  credit  and  bad." 

ENTER  the  bank  slowly  and  come  out  quickly — this 
is  the  thought  that   has   built   a  sound  financial 
policy  for  one  wholesale  grocery  concern. 

The  inside  financing  of  this  business — buying,  credits, 
and  collections  especially — had  not  yet  been  standard- 
ized in  the  "eighties,"  when  this  conference  took  place. 
Neither  of  the  partners  was  willing  to  take  a  banker's 
judgment  of  what  was  safe  procedure  for  a  merchan- 
dising house. 

Part  of  their  stock,  they  knew,  would  prove  "stick- 
ers"; some  of  their  customers'  accounts  would  never  be 
paid  in  full.  If  they  were  listed  as  assets,  the  margin 
of  security  might  disappear  in  time  of  stress  and  destroy 
the  business.  "What  both  partners  sought  to  find  was  a 
sure  financial  foundation  which  should  serve  two  pur- 
poses : 

First,  make  their  own  advance  safe  and  profitable. 

,Second,  provide  absolute  security  for  the  funds  in- 
trusted to  them  by  others. 

The  partner  in  charge  of  the  money  end  was  strug- 
gling to  arrive  at  a  working  basis  for  the  firm's  finan- 
cing. 

"Certain  of  our  accounts  are  as  good  as  cash  on  the 
day  they  fall  due,"  he  suggested.  "I  figure  them  as 
eighty  per  cent  of  the  total  on  our  books.  Of  our  stock, 
I  figure  that  at  least  seventy  per  cent  could  be  closed 
out  in  a  hurry  at  the  inventory  price.  Together,  these 
two  items  make  up  the  quick  assets  on  which  we  can 


FINANCING 


53 


depend.  Add  salvage  on  the  rest  of  our  stock  and 
accounts,  subtract  what  we  owe,  and  the  remainder  gives 
you  the  basis  on  which  we  can  safely  borrow.  If  that 
doesn't  give  us  the  money  we  need  now  for  credit  ex- 
pansion, we  must  change  our  credit  policies.  In  fact, 
these  percentages  show  that  we  ought  to  buy  more  care- 
fully and  be  more  cautious  in  extending  credit. ' ' 

The  sales  manager  protested.  "You  can't  take  the 
risk  out  of  a  business  and  expect  it  to  grow,"  he  de- 
clared. "Why  not  borrow  as  much  as  the  banks  will 
give  us  on  an  honest  statement,  and  go  after  this  busi- 
ness that  we  're  losing  now  ?  At  best  we  are  only  borrow- 
ing until  those  who  owe  us  have  paid  up. ' ' 


CUSTOMERS 

* 
selling  ron  CASH  TO    - 

COMPETITORS  OR  SIMILAR  BUSINESS  . 

BANKERS 

BROKERS 

HOW  TO  RAISE 
MONEY          < 

SECURING  LOAN 

OR  CREDIT   FROM           * 

P 
INDIVIDUAL 

SANK 

MONEY  BROKER 

SUPPLY  MOUSE 

("partner 
OFFERING  INVESTMENT     1 
JN   YOUR  Mlimil  TO     ^NM,.TOCKMOLDERS 

FIGURE  VI:     This  chart  shows  methods  of  raising  funds.     The  first 

method  requires  the  sale  of  merchandise  or  special  holdings.     Loans  and 

credit  may  be  based  on  tangible  assets,  or  simply  on  your  personal  notes 


"That's  the  point.  We  borrow  until  our  debtors 
pay.  To  pay  our  loans  we  must  be  sure  others  will  pay 
what  they  owe  us  when  their  accounts  fall  due. ' ' 

As  I  sat,  waiting,  in  the  private  office  of  the  man  who 
shaped  this  policy,  and  watched  his  swift,  decisive  han- 


54 MEN,    MONEY    AND    DETAIL 

dling  of  crowding  details,  always  twisting  rebellious 
items  back  into  sane  channels,  it  was  plain  that  what 
had  once  been  an  ideal  had  become  a  business  habit. 

The  danger  of  optimism  was  his  first  test  when  he 
swung  away  from  his  desk  and  began  to  lay  down  the 
inflexible  law  upon  which  his  business  had  been  built. 
He  went  back  to  the  turning  point  in  the  firm's  career, 
when  the  vote  went  against  swift  expansion  based  on 
easy  credit. 

"We  knew  two  things  about  money,"  he  declared. 
"We  knew  that  hard-headed  men  will  sometimes  put 
money  into  unsound  ventures.  We  knew,  also,  that 
nothing  makes  a  trader  so  careless  as  to  get  capital 
easily.  To  keep  ourselves  in  check,  therefore,  we  delib- 
erately adopted  the  theory  that  money  is  the  hardest  of 
all  things  to  get.  We  extended  credit — loaned  our  in- 
vestment in  goods  to  buyers  on  the  same  basis." 

How  the  adoption  of  this  policy  changed  the  plans  of 
the  young  concern,  he  told  in  a  few  sentences  filled  with 
the  philosophy  of  a  successful  business : 

"My  partner  was  astounded  to  learn  that  fully  twenty 
per  cent  of  our  accounts  were  not  'gilt  edged.'  He  be- 
gan immediately  to  use  greater  discrimination  in  mak- 
ing credits.  We  failed,  of  course,  to  secure  a  lot  of  busi- 
ness which  we  might  have  had;  we  did  not  set  fire  to 
the  commercial  world  with  our  speed,  but  we  did  get  real 
money  for  our  goods — and  had  real  money  to  pay  our 
debts.    We  played  safe. 

"This  influenced  our  relations  with  the  banks;  we 
went  in  slowly  and  came  out  quickly.  We  borrowed 
a  little  at  first  and  paid  it  back  quickly.  As  business 
grew  and  as  our  balance  increased,  we  borrowed  more. 
But  no  loan  was  ever  asked  until  the  banks  knew  that 
we  knew  where  we  could  get  the  money  if  the  loan  was 


FINANCING  55 


called.  Today  we  could  borrow  a  quarter  of  a  million  as 
easily  as  we  secured  ten  thousand  dollars  twenty-five 
years  ago.    Yet  we  have  never  sold  a  piece  of  paper. ' ' 

HOW  a  furniture  house  and  a  retail  coal  concern 
have  developed  sound  financial  policies — difficulties 
they  found  in  the  way  of  success. 

This  is  the  old-fashioned  conception  of  safe  financing 
for  a  mercantile  house — a  self-contained  business,  rooted 
broad  and  strong  on  a  policy  which  puts  no  trust  in 
luck  and  forestalled  chance,  fed  with  the  profits  it  has 
made  and  to  which  it  has,  in  the  minds  of  its  owners, 
the  first  claim.  Compared  with  the  Aladdin  structures 
reared  in  recent  years  from  "opportunity,  plus  a  shoe 
string,"  this  staid  old  house,  despite  its  millions,  lacks 
imaginative  appeal.  To  the  men  who  built  it,  however, 
for  their  sons'  grandsons,  their  plan  of  financing  was  the 
only  absolutely  safe  one.  Summed  up,  it  stands :  a  mer- 
chant has  nothing  but  goods  and  accounts;  he  should 
have  enough  capital  to  carry  these  until  they  can  be 
disposed  of  with  profit. 

To  hold  expansion  within  safe  bounds  and  find  the 
money  for  vital  growth  are  major,  and  related,  problems 
in  any  thriving  store.  To  match  our  wholesale  grocer's 
conception  of  safe  financing  against  the  experience  of 
other  merchants,  I  went  to  a  furniture  man,  with  a  busi- 
ness history  quite  as  long  and  as  profitable.  He,  too, 
could  speak  in  the  accents  of  authority  and  recognized 
success. 

"We  use  our  surplus  money  to  test  the  demand  for 
promising  articles  outside  the  staple  lines,"  he  said. 
"Handling  our  money  in  this  way,  the  financing  of 
growth  and  expansion  is  attended  with  little  risk,  par- 
ticularly if  you  adopt  the  companion  method  of  letting 


56 MEN,     MONEY    AND    DETAIL 

every  regular  department  start  slowly  and  develop  only 
as  your  customers  force  the  development." 

There  are  seven  rules  of  store  finance,  this  furniture 
man  declares.    He  enumerates  them  as  follows : 

"Begin  with  enough  capital  to  carry  you  until  you 
have  turned  your  goods  three  times.  Then  you  will  not 
need  any  more  unless  your  mistakes  in  judgment  prove 
costly. 

'  '  Never  take  money  out  of  your  business  to  invest  in 
other  lines.  If  you  know  enough  about  other  lines  to 
invest  in  them  you  have  been  neglecting  your  own  busi- 
ness. If  you  don't  know  all  about  the  other  business, 
you  are  speculating  and  robbing  your  own  business. 

"Never  take  money  out  of  your  business  to  indulge  a 
taste  for  a  luxury  until  you  are  sure  the  business  does 
not  need  it. 

"Never  crowd  a  customer  unduly.  If,  after  investiga- 
tion, you  extend  credit  to  him,  you  can't  afford  because 
of  temporary  necessities  to  make  him  feel  that  you  re- 
gret your  decision  to  trust  him. 

"Never  ask  a  house  whose  goods  keep  you  in  business 
to  wait  for  its  money.  It  may  extend  the  accommodation 
— it  probably  will — but  in  the  end  you'll  pay  much  more 
than  interest  on  the  money  involved  in  the  transaction. 

"If  you  need  cash,  temporarily,  go  to  the  bank.  A 
good  standing  at  the  bank  is  a  convenience  in  fair 
weather  and  a  safeguard  in  time  of  trouble. 

"Build  up  your  departments  one  at  a  time  by  using 
idle  money.  If  you  expand  on  your  earnings  you  grow. 
If  you  start  new  departments  on  borrowed  money  or 
new  capital  you  are  conducting  several  businesses  under 
one  name  and  multiplying  the  chances  of  failure. ' ' 

Radically  different,  in  its  money  needs,  from  either  of 
these  merchandising  types  is  the  business  of  selling  coal 


FINANCING  57 


at  wholesale.  Here  the  assets  consist  solely  of  accounts 
receivable,  for  the  reason  that  there  is  never  any  large 
amount  of  stock  which  can  be  inventoried.  The  whole- 
sale coal  man  deals  in  a  commodity  which  usually  does 
not  leave  the  cars  while  in  his  possession. 

Another  difficulty  in  its  financing  is  that  the  business 
is  highly  speculative,  for  the  reason  that  the  supply  of 
coal  land  is  practically  unlimited.  This  means  unre- 
stricted competition  and  prices  hinging  on  fluctuating 
influences.  For  years  the  producer  with  the  necessary 
minimum  of  mine  equipment  could  compete  with  the 
best  equipped  concern.  Until  recently  almost  the  only 
consideration  in  buying  coal  has  been  the  price.  This 
price  fluctuated  violently  with  the  demand ;  and  demand 
fluctuated  violently  with  weather  changes. 

To  buy  soft  coal  at  wholesale  and  sell  it  at  a  profit 
of  one  dollar  or  more  a  ton  is  a  common  occurrence; 
to  buy  and  sell  at  a  loss  of  one  dollar  or  more  a  ton  is 
also  very  common.  For  these  reasons  it  is  hard  to  figure 
out  a  safe  basis  for  financing  the  actual  transfer  of  coal 
from  producer  to  consumer. 

Add  to  these  disadvantages  the  fact  that  credits  and 
collections  are  usually  handled  with  less  regard  for  sys- 
tem and  regularity  than  in  other  trades,  and  the  prob- 
lem of  financing  a  jobbing  business,  with  limited  capital, 
becomes  acute.  How  one  young  firm  of  wholesalers 
worked  out  a  successful  plan  of  financing  such  a  volatile 
business  was  described  by  the  managing  partner  as 
follows : 

"In  the  coal  trade  troubles  focus  on  the  slowness  of 
collections.  Statements  are  rendered  regularly,  but  the 
buyer  usually  takes  his  time.  When  we  started,  how- 
ever, our  capital  was  small  and  anything  but  prompt 
receipt  of  money  for  coal  shipped  would  bring  failure. 


58 MEN,    MONEY    AND    DETAIL 

We  adopted  the  policy,  therefore,  of  collecting  when 
our  bills  fell  due — either  in  cash  or  by  a  settlement  note. 
The  notes  give  us  a  basis  of  bank  credit,  where  an  open 
account  would  not. 

1 '  In  negotiating  our  own  loans,  we  first  used  indorsed 
paper.  Part  of  our  first  surplus  we  invested  in  good  in- 
terest-bearing securities  for  use  as  collateral.  After  that 
we  borrowed  a  little  more  without  security,  while  that 
collateral  was  still  in  the  bank.  We  built  up  our  credit, 
moving  slowly  and  looking  at  each  loan  always  with  the 
eyes  of  the  banker  rather  than  with  our  own.  We  never 
discounted  a  piece  of  paper  without  asking  first:  'What 
is  behind  this  note  ? '  If  it  passed  scrutiny  we  discounted 
it.    If  it  was  doubtful  we  carried  it  ourselves. ' ' 

Here  the  day-to-day  financing  of  the  business  hinged 
on  the  transformation  of  past-due  accounts  into  ready 
money  by  the  discounting  of  the  customers'  notes — a 
method  which  wholesalers  in  mercantile  lines  are  loath 
to  employ,  since  it  introduces  into  the  customer  equa- 
tion an  outside  element,  which  may  turn  hostile  and  dis- 
turb delicately  balanced  relations.  The  effect  on  to- 
morrow's sales  as  well  as  on  the  more  remote  future  of 
the  business  is  an  item  which  must  appear  in  the  sum- 
ming up  of  the  advantages  and  the  weaknesses  of  any 
financial  policy. 


T  SO  systematize  my  work  that  the  weak  spot  is  quickly  evi- 
dent.    This  leaves  me  the  strength  that  some  men  put  into 
a  losing  fight  and  expend  on  the  defensive,  to  devote  to  the  ini- 
tiative. 

— Edward  D.  Eastern 

President,  Columbia  Phonograph  Company 


VI 

SHORT  CUTS  IN  EXECUTIVE 
WORK 

By  George  H.  Cushing.  and  We«ley  A.  Stanger, 
Manager,  Royal  Typewriter  Company,  Chicago  Branch 

WHILE  exchanging  the  greetings  usual  at  a  direc- 
tors' meeting  not  long  ago,  one  man  noted  the 
tanned  cheeks  and  the  athletic  wholesomeness  of  the 
man  at  his  side. 

"I  play  golf  every  afternoon,"  was  the  explanation, 

"Play  golf!  How  do  you  find  time?" 

"I  have  a  system,"  replied  the  athlete. 

"I  have  a  system,  too,"  said  the  other.  ''Yet  when 
I  play  golf  I  always  feel  as  though  the  time  were  stolen 
from  work." 

"That's  just  how  I  felt  about  it  before  I  devised  a 
system  that  includes  my  own  work  as  well  as  the  work 
of  my  organization,"  replied  the  out-of-door  man. 

Both  these  men  control  efficient  organizations.  One, 
however,  has  so  organized  his  personal  work  that  he  finds 
time  for  recreation — a  factor  that  plays  no  small  part 
in  maintaining  his  efficiency.  The  other  labors  from 
eight  to  twelve  hours  each  day,  because  he  has  not  cre- 
ated an  organization  or  system  of  work  for  the  conduct 
of  his  personal  duties  at  the  office. 

To  be  sure,  he  has  crowded  an  increasing  quantity  of 
work  into  a  given  amount  of  time,  but  he  has  not,  at  the 
same  time,  conserved  his  energy  as  has  the  executive 
who  cuts  out  all  wasteful  details  and  gives  his  personal 


60 MEN,    MONEY    AND    DETAIL 

efforts  the  advantage  of  many  time  and  labor-saving 
systems  and  devices.  The  latter  occasionally  unwraps 
himself  from  the  intricacies  of  his  organization  and 
makes  a  scientific  investigation  of  his  own  work  as  such, 
solely  to  find  out  ways  and  means  of  conserving  his  per- 
sonal time  and  energy  for  concentration  on  important 
matters.  Such  occasional  prospects  of  his  personal  work 
also  give  him  a  chance  to  judge  actual  values  and  pick 
out  the  "most  important  matters"  for  personal  atten- 
tion. 

HOW  the  successful  executive  builds  an  organization 
that  cares  for  routine  details  and  saves  the  valuable 
minutes  of  his  business  day. 

But  whether  an  executive  works  four  or  sixteen  hours 
a  day  to  perform  his  duties,  he  must  first  build  up  an 
efficient  organization  to  carry  on  the  details  of  his  busi- 
ness. No  head  of  a  business  or  of  a  department  can 
afford  to  have  outside  recreation  until  he  has  organized 
a  capable  force  of  assistants  who,  if  necessary,  can  carry 
on  his  business  satisfactorily  in  his  absence.  The  build- 
ing of  such  an  organization  is  the  executive's  first  prob- 
lem. How  he  solves  it  is  a  fair  measure  of  his  executive 
ability.  And  the  solution  of  this  problem  is  inseparably 
associated  with  the  manner  in  which  an  executive's  own 
time  is  employed.  When  such  an  organization  is  once 
whipped  into  shape,  the  executive's  work  narrows  down 
to  ways  and  means  of  putting  final  touches  on  the  rou- 
tine of  his  personal  responsibilities. 

In  general,  there  are  six  chief  sources  of  lost  time  in 
an  executive's  work.  These  may  be  separated  into  those 
that  come  from  outside  the  business  and  those  that  orig- 
inate inside  of  the  office.  Mail,  visitors  and  telephone 
calls  comprise  the  first  class j  "inside"  causes  include 


EXECUTIVE    SHORT    CUTS 61 

reports,  meetings  and  inspections. 

Few  executives  are  so  happily  situated  that  they  can 
make  rules  regarding  hours  for  callers  and  enforce 
them.  The  man  who  would  be  satisfied  with  a  letter  dic- 
tated and  signed  by  an  assistant  usually  resents  the 
refusal  of  an  executive  to  see  him  personally. 

A  few  executives  pride  themselves  on  their  democracy, 
on  the  fact  that  "any  man  at  any  time  can  come  right 
up  to  my  desk,"  as  one  employer  of  thousands  put  it; 
they  surrender  their  time  on  demand  to  any  one  who 
presents  himself.  Then,  necessarily,  these  executives 
resort  to  all  sorts  of  expedients  to  shorten  or  terminate 
a  large  number  of  petty  interviews.  Most  executives 
find  it  easier  to  keep  callers  out  than  to  get  them  to  go. 

The  president  of  a  manufacturing  company  brought 
into  his  office  a  courteous  and  diplomatic  young  lawyer 
and  gave  him  first  the  title  of  "assistant  to  the  presi- 
dent," and  later,  "vice-president."  This  young  man 
was  present  at  every  interview  during  the  first  year. 
Thereafter  the  "vice-president,"  who  held  one  share  of 
stock,  received  the  callers  and  usually  succeeded  in  elim- 
inating all  save  the  actual  few  whom  it  was  unquestion- 
ably to  his  chief's  interest  to  see. 

Such  a  "shock  absorber"  system  depends  for  its  suc- 
cess, of  course,  upon  the  personality  of  the  subordinate. 

But  unless  an  executive  is  sure  that  he  has  a  capable 
man  guarding  the  door  to  his  sanctum,  a  man  who  can 
select  those  to  be  "turned  down,"  it  is  usually  unsafe 
to  refuse  to  see  any  callers ;  often  a  good  slice  of  profit- 
able business  results  from  courteous  treatment  of  appar- 
ently unprofitable  visitors. 

"When  a  traffic  director  of  one  of  our  greatest  railroads 
was  with  a  smaller  road,  he  granted  a  courteous  hearing 
to  the  complaint  of  a  traveler.    Several  years  later,  when 


62 MEN,     MONEY    AND    DETAIL 

he  had  become  traffic  manager  of  the  greater  road,  this 
traveler  called  at  his  office.  An  important  conference 
was  under  way,  but  going  to  the  door  of  his  private  of- 
fice and  greeting  the  caller  cordially,  the  traffic  manager 
said: 

"I'm*  sorry  you  find  me  busy,  but  I'm  tied  up  for  a 
couple  of  hours.    Can't " 

"I  just  wanted  to  say,"  broke  in  the  visitor,  "that 
I  am  on  the  transportation  committee  for  the  annual 
outing  of  our  society  next  month,  and  I  wanted  you  per- 
sonally to  know  I  had  not  forgotten  your  courtesy  of 
some  years  ago.  If  you  will  send  a  man  to  my  office  with 
rates  for  a  party  of  two  hundred,  I'll  see  that  you  get 
the  business." 

Telling  about  this  event  and  others  of  a  similar  nature, 
subsequently,  this  successful  railroad  man  said  to  a 
friend : 

' '  I  've  had  so  many  queer  experiences  with  callers  that 
I  never  like  to  let  one  get  out  of  my  office  without  per- 
sonally finding  out  what  he  has  on  his  mind.  Ordinarily, 
a  man  does  not  try  to  pay  a  visit  to  a  busy  man  unless 
he  has  a  purpose.  To  get  that  purpose,  I  spend  a  few 
seconds  with  each  caller  and,  if  I  can't  handle  the  case 
instantly,  I  make  an  appointment." 

In  this  particular  instance,  the  executive  made  it  ap- 
parent by  his  manner  that  the  visitor  was  welcome  and 
also  that  time  was  limited.  It  was  a  subtle  invitation 
to  do  business  quickly,  or  come  back  later  for  a  more 
prolonged  discussion.  It  also  cordially  invited  the  vis- 
itor to  say  what  he  had  to  say  and  get  away  quickly. 

A  well-known  executive  in  a  large  newspaper  office,  a 
man  who  invariably  gets  the  most  out  of  his  callers,  and 
who  always  gets  rid  of  them  when  they  have  taken  as 
much  of  his  time  as  it  is  profitable  for  him  to  give,  re- 


EXECUTIVE    SHORT    CUTS 


63 


eently  advised : 

"If  you  want  to  get  the  most  from  the  other  fellow, 
never  talk  about  yourself  nor  permit  him  to  talk  about 
you." 

On  one  occasion  an  elderly  ex- judge  from  out  of  town 
entered  this  man's  office,  pulled  up  a  chair  and  seemed 
disposed  to  indulge  comfortably  in  a  long  chat.  Imme- 
diately he  was  pinned  down  to  interesting  and  profitable 
subjects.  Before  a  half  hour  was  over,  when  the 
judge  was  bowed  cordially  out  of  the  door,  he  had  told 
a  story  which  was  illustrated  and  used  in  the  Sunday 
paper,  had  given  facts  which  shed  important  side  lights 


FIOURE  VII:  A  specimen  desk  portfolio  in  which  the  modern  executive 
places  notes,  memoranda  and  correspondence  that  require  personal  atten- 
tion.    This  book  is  particularly  useful  as  a  hold-over  file  for  unfinished 

business 

on  a  big  piece  of  news  then  running  in  the  telegraph 
columns,  and  had  told  other  facts  used  with  telling  effect 
by  the  political  writer. 

When  any  caller's  time  was  up,  when  he  had  told 
this  executive  all  that  was  of  value,  he  did  not  find  the 
chair  in  which  he  sat  a  comfortable  place  to  spend  the 


64 MEN,     MONEY    AND    DETAIL 

remainder  of  the  morning.  To  permit  that  would  be  to 
wipe  out  all  of  the  advantage  of  the  other  tactics,  for  it 
would  lose  through  one  method  the  time  gained  through 
another. 

While  it  was  not  the  business  of  this  newspaper  execu- 
tive to  "read  copy,"  all  of  the  news  from  the  city  staff 
passed  over  his  desk.  Therefore,  he  always  had  a  con- 
venient bundle  of  papers  on  his  desk  so  that  when  a 
stranger  stayed  a  little  longer  than  necessary,  these 
manuscripts  would  begin  to  come  out  of  pigeonholes  and 
odd  places  until  they  made  a  formidable  pile.  Usually 
the  caller  took  the  hint  and  left  hurriedly. 

Getting  the  visitor  out  of  the  office  on  schedule  time  is 
a  delicate  task,  but  it  is  as  vital  to  executive  efficiency 
as  getting  all  he  has  to  say  of  profit  before  he  leaves. 
This  executive  understood  both  methods  and  employed 
them  with  consummate  tact,  when  he  could,  but,  rather 
than  risk  lowering  his  personal  efficiency,  he  would  re- 
sort to  extreme  methods. 

A  traction  executive  observes  a  simple  and  straight- 
forward method  of  avoiding  unnecessarily  prolonged 
interviews.    To  a  caller  not  long  ago  he  said: 

"I  have  a  meeting  this  morning  at  ten,  which  gives 
me  fifteen  minutes  now.  I  will  be  back  at  half  past  one 
and  will  then  have  a  half  hour  before  two  o  'clock,  when 
I  have  another  engagement.  If  fifteen  minutes  will  do, 
I  wish  you  would  come  in  now;  if  it  will  take  longer, 
suppose  you  come  around  this  afternoon. ' ' 

No  visitor  could  expect  to  trespass  upon  an  important 
board  meeting,  so  no  offense  could  be  taken. 

Another  executive  excuses  himself  from  callers  by  a 
buzzer  system.  When  his  secretary  announces  a  visitor, 
he  tells  him  how  many  minutes  he  will  be  allowed.  At 
the  end  of  that  time  his  buzzer  rings,  he  rises,  excuses 


EXECUTIVE    SHORT    CUTS  65 

r- 

I 

himself  and  the  caller  usually  leaves  without  further  ado. 

If  another  man  comes  to  see  this  executive  while  a 
conversation  is  in  progress,  and  the  secretary  knows  that 
his  superior  wants  to  see  him,  a  buzzer  signal  notifies 
him  of  this  fact.  Then  if  he  is  interviewing  a  man  who 
refuses  to  go,  when  ordinary  methods  fail,  he  presses  a 
secret  button  which  signals  his  secretary  to  appear  and 
tell  him  that  he  is  wanted  in  some  other  part  of  the 
office. 

On  the  desk  of  the  private  secretary  of  another  execu- 
tive, concealed  from  the  view  of  the  caller,  is  a  device 
containing  a  roll  of  paper,  upon  which  the  name  of  every 
caller  and  a  statement  of  his  business  is  written  by  a 
pencil  that  is  operated  by  electricity.  This  writing  is 
transmitted  to  a  similar  device  on  the  desk  of  the  execu- 
tive. Thus,  while  he  is  talking  to  one  man,  he  is  kept  in 
touch  with  what  is  going  on  outside.  "When  a  caller 
stays  too  long,  he  points  to  the  long  list  and  states,  "I 
have  an  appointment  with  Mr.  Jones,  and  he  has  been 
waiting  ten  minutes.  I  must  ask  you  to  pardon  me." 
The  visitor  seldom  intrudes  further.  As  soon  as  the 
caller  leaves,  he  picks  up  the  eleetric  pencil  and  notifies 
his  secretary  what  comes  next,  and  thus  keeps  in  con- 
stant communication  with  him  without  the  use  of  a  tele- 
phone or  buzzer. 

COMPARATIVE  reports  from  which  every  non-essen- 
tial is  excluded  are  compiled  daily  and  placed  on  the 
executive's  desk  to  keep  him  in  intimate  touch. 

The  prevention  of  executive  waste  from  inside  the 
office  is  quite  as  important  in  attaining  a  high  degree  of 
personal  efficiency  as  waste  from  without.  Of  these,  the 
reading  of  reports  is  a  prolific  time  consumer. 

Condensed  daily  reports,  comprehensive  in  scope,  com- 


66 MEN,     MONEY    AND     DETAIL 

pared  with  periods  at  stated  intervals  in  past  years,  af- 
ford an  economical  and  authoritative  grasp  of  the  busi- 
ness as  a  whole.  Such  statistics  are  a  sort  of  express- 
elevator  method  of  getting  an  effective  commercial  view 
attained  in  the  past  only  by  laborious  stair-climbing.  By 
means  of  graphic  charts — where  squares  on  paper  repre- 
sent time  in  one  dimension  and  quantity  or  value  in  the 
other — the  mind  is  enabled  to  grip  quickly  the  varia- 
tions which,  if  studied  through  the  medium  of  numer- 
ical columns,  could  be  grasped  only  after  a  siege  of  men- 
tal application.  Department  reports,  division  reports 
and  all  kinds  of.  house  reports  gain  by  this  mode  of 
expression. 

The  task  of  keeping  tab  on  purchases,  current  prices, 
fluctuations  and  other  details  is  a  good  test  of  any  execu- 
tive 's  ability.  He  should  be  sufficiently  conversant  with 
conditions  to  check  up  intelligently  the  work  of  his 
assistants.    Graphic  charts  facilitate  this  work. 

One  executive  uses  artists'  gauge  sheets  for  the  pur- 
pose. These  sheets  are  finely  lithographed  with  lines 
running  each  way,  like  "quadrilled"  paper.  Each  sheet 
shows  the  number  of  squares  to  the  inch,  and  each 
square  inch  is  ruled  off  with  heavier  lines.  This  execu- 
tive employs  a  clerk  who,  with  colored  ink  and  a  mark- 
ing pen,  draws  lines  from  left  to  right  to  show  the  daily 
rise  and  fall  in  prices.  He  runs  each  chart  for  five 
years.  The  name  of  the  material  traced  is  printed  at 
the  top  of  the  page.  Various  colored  inks  are  used  to 
distinguish  different  years,  so  that  a  glance  shows  any 
important  deviations.  At  the  end  of  the  year  the  line 
has  progressed  across  the  chart  through  a  twelve-month 
section. 

He  also  uses  a  daily  record  of  factory  products  that 
shows  five  years'  records  as  they  vary  from  day  to  day. 


EXECUTIVE    SHORT    CUTS 


67 


Every  morning  the  charts  are  put  on  his  desk.  He  notes 
the  tendency  of  the  market  and  the  conditions  of  the  day 
previous,  also  a  comparison  of  past  years.  Thus  with 
little  effort,  no  hunting  and  no  written  reports  to  wade 
through,  he  keeps  before  him  a  picture  that  warns  him 
of  any  tendency  towards  weakness. 


FIGURE  VIII:    A  clever  device  for  facilitating  the  collection,  sorting  and 
delivery  of  papers  in  an  office — a  "mail  bag"  arranged  in  compartments  in 
which  each  department's  correspondence  is  placed 


Railroad  presidents  must  be  familiar  with  many  differ- 
ent kinds  of  reports.  The  head  of  several  interurban 
railways  gets  complete  daily  reports  of  every  detail 
in  connection  with  each  of  his  lines.  He  can  tell  at  nine 
in  the  morning — unless  the  telegraph  wires  are  down 
and  the  mail  trains  wrecked — exactly  how  many  fares 
were  taken  on  every  line  the  day  before,  how  much  it 
cost  to  operate,  how  many  men  were  employed — a  sum- 
mary of  all  important  details  in  the  operation  of  the 
lines.  He  does  this  by  means  of  printed  report  blanks 
in  which  only  figures  or  a  word  or  two  need  be  inserted. 
He  knows  what  the  printed  portions  say  and  saves  time 
by  reading  only  the  matter  inserted.  The  complete  re- 
port of  each  of  his  lines  is  reduced  to  a  form  three  inches 
wide  and  eleven  inches  long.     His  men  maintain  their 


68 MEN,     MONEY    AND    DETAIL 

daily  recapitulations  so  carefully  that  their  chief  closes 
his  business  every  day  as  though  it  were  his  last  on  earth. 

Another  executive,  also  the  head  of  a  large  corpora- 
tion, keeps  constantly  in  touch  by  reports  that  come  in 
every  few  minutes.  He  has  arranged  the  entire  office 
force  to  carry  out  his  scheme. .  To  the  left  of  his  private 
office  is  a  receiving  department,  where  all  incoming  mat- 
ter is  received.  From  here  it  is  distributed  and  sorted 
and  started  on  the  journeys  through  the  huge  office 
machine.  In  this  routine  the  details  become  more  and 
more  condensed,  so  that  when  they  reach  the  chief  they 
are  reduced  to  the  bare  essentials. 

This  man  motors  to  his  office  at  ten  in  the  morning, 
spends  two  hours  at  luncheon,  and  leaves  at  four.  Yet 
he  superintends  every  movement  of  a  mammoth  busi- 
ness by  spending  practically  all  his  time  scanning  reports 
and  making  suggestions.  He  is  a  high  type  of  the  rare 
executive  who  handles  a  big  business  entirely  through  a 
highly  developed  report  system. 

Many  executives  arrange  a  schedule  which  calls  for 
weekly  or  daily  meetings  with  their  staff  members.  While 
few  are  so  radical  as  to  deny  the  tremendous  impetus 
that  results  from  the  personal  touch  acquired  in  these 
meetings,  many  insist  that  far  too  much  time  is  lost 
through  failure  to  adhere  with  strictness  to  a  rigidly- 
drawn  program. 

WEEKLY  or  daily  conferences  help  clear  up  many 
executive    problems — how    advance    preparation 
makes  these  meetings  yield  greater  results. 

Discussions  usually  develop  diverse  views.  Mental 
processes  vary  with  the  individual.  Some  think  quickly, 
others  grasp  subjects  slowly,  approach  discussions  cau- 
tiously and  scarcely  develop  interest  until  most  men  are 


EXECUTIVE    SHORT    CUTS 69 

through.  The  opinions  of  these  men  are  valuable,  but, 
rather  than  humor  their  mental  attitude,  one  executive 
has  found  it  an  economical  plan  to  send  around  a  synop- 
sis of  the  subjects  to  be  discussed.  This  idea  was  de- 
veloped through  his  sales  manager,  whose  men  came  in 
each  week.  On  Thursday  morning  each  man  received  a 
letter  outlining  the  Saturday  conference.  Here  is  a 
sample : 

Subject:    November  Sales. 

(a)  Northern  District  (Comparisons  and  divergences) . 
Eastern  District. 

Western  District. 
Southern  District. 

(b)  Factory  Shipments. 
Storage  Shipments. 

(c)  Foundry  Improvements. 
Sales  Talks — Saturday,  November  11th. 
Subject:    The  Howie  Patents. 

(a)  Where  the  "Gem  Royal"  falls  down. 

(b)  Howie  patents  on  coke  burners. 

(c)  Our  suits  for  infringement. 

(d)  Davenport  tests  in  radiation. 

On  that  morning  twelve  salesmen  and  the  sales  man- 
ager meet  at  10:30  and  in  one  hour  have  studied  the 
charts,  heard  the  best  selling  argument  of  the  week, 
learned  how  factory  shipments  were  coming  on,  and  de- 
parted. "One  minute  talks"  are  the  rule.  The  sales 
manager  talks  five  minutes  at  the  opening  and  generally 
five  minutes  at  the  close  of  each  meeting. 

"When  reports  of  meetings  reveal  to  the  executive  indi- 
cations of  trouble  in  any  department,  immediate  per- 
sonal attention  is  demanded.  Rarely,  however,  should 
the  executive  indulge  in  a  personal  inspection  of  details 
except  when  urgent. 

For  instance,  mail  sales  may  be  inspected  for  careless 
handling  by  taking  any  one  delivery  and  looking  up  the 


70 MEN,    MONEY    AND    DETAIL 

complaints.  Agency  sales  may  be  inspected  through  ad- 
justment letters;  accounting,  purchases,  operation  and 
general  expense,  by  selecting  a  typical  case  and  following 
it  through.  Here  only  does  an  executive  come  into  actual 
contact  with  details.  As  a  rule,  he  can  get  at  the  root  of 
a  difficulty  by  a  few  pointed  questions.  If  he  finds  the 
necessity  of  inspections  when  he  has  no  inkling  of 
trouble,  there  is  something  wrong  with  his  own  work. 

Time-saving  mechanical  devices,  such  as  the  "telauto- 
graph," overhead  basket  carriers,  graphic  charts,  mail 
assorters,  and  so  forth,  play  an  important  part  in  the 
maintenance  of  an  efficient  organization.  Many  of  them 
are  especially  designed  to  short-cut  the  executive's  in- 
dividual work.  But,  in  addition  to  the  use  of  all  the 
best  mechanical  devices,  ability  to  organize  himself,  to 
conserve  his  own  time  apart  from  mechanical  aids,  marks 
the  difference  in  the  personal  efficiency  of  the  business 
man. 

An  executive's  efficiency  is  in  direct  proportion  to  the 
amount  of  effective  work  he  is  able  to  crowd  into  each 
hour.  If  he  so  regulates  his  mail,  personal  and  tele- 
phone callers,  his  reports,  meetings  and  inspections,  even 
to  the  point  of  having  time  for  physical  recreation  every 
afternoon — that  is  personal  efficiency. 


T  FEEL  that  management  is  destined  to  become  more  of  an 
art;  that  it  will  be  studied  as  an  art  and  will  rest  upon  well- 
recognized,  clearly-defined  and  fixed  principles,  instead  of 
depending  on  more  or  less  hazy  ideas  received  from  a  limited 
observation  of  the  few  organizations  with  which  the  individual 
may  have  come  in  contact, 

— Frederick    Taylor 

Author,  The  Principles  oi  Scientific  Management 


PART  III— HOW  FOURTEEN 

MANAGERS  HANDLED 
THEIR  BIGGEST  PROBLEMS 

Founding  a  Business 

T  TNDER  the  building  recently  erected  by  But- 
^  ler  Brothers  stand  one  hundred  and  ninety- 
two  caissons,  six  feet  in  diameter,  extending  down 
to  hardpan  seventy -five  feet  below  the  basement. 

If,  before  the  superstructure  was  erected,  the 
earth  had  been  excavated  from  about  these  cais- 
sons, they  would  have  appeared  like  a  forest  of 
huge  concrete  columns  rising  high  in  the  air.  And 
yet,  as  one  looked  upon  the  work  just  before  the 
basement  was  walled  in,  he  saw  no  evidence  of 
caissons;  only  the  trampled  pit.  There  was  noth- 
ing in  sight  to  indicate  the  mighty  lifting  power 
that  had  so  patiently  been  prepared  for  the  lofty 
structure  to  come. 

And  thus  it  is  with  a  great  business,  although 
the  unthinking  man  does  not  appreciate  this  fact. 
He  tries  to  build  a  business  upon  the  shallow 
foundation  which  he  sees,  without  providing  cais- 
sons that  go  down  to  the  solid  rock.  He  over- 
looks the  fact  that  back  of  and  under  every  great 
success  there  are  years  of  right  thinking  and 
right  doing — cemented  columns  of  honest  effort 
and  honest  dealing — which,  like  massive  piers  of 
concrete,  will  sustain  that  business  from  genera- 
tion to  generation. 


>^w^  <2®*&&. 


EDWARD  B.  BUTLER 

President,  Butler  Brothers 


VII 

HOW  SIX  PROPRIETORS 
MADE  GOOD 

By  Don  E.  Mowry 

TRAMP  down  Main  street  in  any  one  of  a  thousand 
American  cities  or  towns.  Right  and  left,  at  hand 
or  across  the  way,  your  eye  is  caught,  your  interest  cap- 
tured, by  three,  five,  perhaps  a  dozen,  stores.  Their 
fronts  are  modern;  the  window  displays  fresh;  you'll 
find  wares  and  prices  equally  alluring.  Often  as  not  the 
owner  himself  will  wait  on  you.  His  cordial  manner, 
his  salesmanship,  impress  you;  perhaps  you  purchase 
something  you  did  not  know  you  wanted. 

As  a  business  man,  you  seek  to  learn  the  reason.  "Why 
has  this  man  succeeded?"  you  ask.  "What  ideas  or 
personal  qualities  have  shaped  this  business?  What  is 
his  plan?"  Question  him;  he  gives  you  an  off-hand 
opinion.  Go  back  again  and  again,  start  him  thinking 
and  analyzing,  and  you'll  dig  out  the  true  fact  story 
of  his  success. 

Such  are  the  six  fact  stories  which  follow  here.  Sev- 
eral business  men  in  one  city  of  twenty-five  thousand  tell 
them.  Young  men,  all — young  businesses,  too — they 
were  chosen  for  analysis:  first,  because  they  are  going 
and  growing ;  second,  because  their  builders  owe  nothing 
to  outside  influences,  and  third,  because  each  man  had  a 
plan,  a  definite  idea  shaping  and  inspiring  his  work. 
Back  of  the  success  of  these  men  lie  the  fundamental 


74        TURNING    POINTS    IN    MANAGEMENT 

reasons  for  all  business  success.  Their  problems  are  your 
problems;  their  solutions  may  suggest  the  creative  idea 
or  impulse  your  business  needs. 

THE  REAL  ESTATE  DEALER:  Beginning  as  a 
stranger  in  a  small  city,  and  in  debt  one  thousand 
dollars,  he  cleared  twenty-five  thousand  dollars  in  three 
and  a  half  years  by  analyzing  his  market  and  rightly 
managing  the  financial  end  of  his  business. 

Without  a  dollar,  I  came  to  this  city  three  and  one- 
half  years  ago.  In  fact,  I  was  in  debt  a  thousand  dol- 
lars on  account  of  sickness  in  my  family.  I  came  here 
because  I  saw  that  the  location  was  my  real  capital.  The 
city,  lying  between  two  lakes,  must  grow  at  the  ends,  if 
at  all.  The  rate  of  increase  in  population  I  found  to  be 
about  thirteen  hundred  people  a  year. 

There  were  plenty  of  real  estate  men  in  the  city  at 
the  time  I  arrived.  For  this  reason,  as  well  as  for  others, 
I  started  out,  perforce,  in  a  small  way.  I  first  bought 
a  house  on  a  five  dollar  option  and  sold  it  before  my  op- 
tion expired,  making  ninety-eight  dollars  on  the  ven- 
ture. My  next  transaction  netted  me  three  hundred 
dollars. 

In  the  course  of  a  year  several  moneyed  men  who  saw 
that  I  was  making  my  "deals"  go,  asked  me  to  float 
their  suburban  land  proposition.  By  hard  work — and  it 
was  mighty  hard  work  to  look  after  the  details — I  carried 
this  first  big  deal  through  successfully. 

My  next  move  was  to  interest  men  with  capital  in 
suburban  tracts  which  would  eventually  be  required  for 
city  lots.  Not  a  single  real  estate  man  had  ventured  to 
market  property  in  the  outskirts  of  the  city.  They  unan- 
imously predicted  my  failure  and  said  I  was  undertaking 
more  than  I  could  handle.    These  older  real  estate  men 


HOW    SIX    OWNERS    MADE    GOOD  75 

did  not  see  the  advantage  of  my  locations ;  they  did  not 
realize  that  the  city  had  to  grow  in  the  direction  of  my 
proposed  tracts.  The  average  man  in  this  city  saw  that 
here  was  an  opportunity  to  get  a  lot  for  a  home  at  a  rea- 
sonable figure.  That  my  plan  was  successful  is  proved 
by  the  fact  that  these  land  purchases  netted  my  investors 
from  seventy-five  to  a  hundred  and  fifty  per  cent. 

In  these  first  suburban-tract  deals  I  received  an  ef- 
fective jolt.  I  discovered  that  I  was  making  a  large 
profit  for  my  investors  but  only  a  small  commission  for 
myself.  Further  than  that,  these  very  investors  to 
whom  I  had  brought  large  financial  returns,  did  not 
leave  their  money  with  me  for  future  investment.  They 
either  invested  it  in  bonds,  mortgages  or  other  securities 
or  were  satisfied  to  leave  it  in  the  banks. 

I  organized  my  own  investment  company,  incorporated 
it,  put  myself  and  my  small  office  force  on  a  salary 
basis  and  began  operations.  The  lake  shore  around  the 
city  was  occupied  by  a  few  of  the  townspeople  in  the 
summer  months,  and  at  that  time  a  number  of  cottages 
had  been  erected.  I  bought  up  as  much  of  the  lake  shore 
as  I  could  handle  alone  and  interested  a  number  of  busi- 
ness men  to  take  stock  in  my  company.  Then  we  bought 
more  lake  shore  property.  You  will  be  surprised  to 
know  that  a  lake  lot,  fifty  by  one  hundred  and  twenty 
feet,  within  five  miles  of  the  city,  costs  from  nine  hun- 
dred to  fourteen  hundred  dollars  today.  All  of  which 
indicates  that  others  were  quick  to  see  the  strategy  of 
location  when  it  was  called  to  their  attention. 

I  have  been  given  interests  in  other  land  companies 
for  my  part  in  promoting  them.  These  interests,  to- 
gether with  the  shares  which  I  hold  in  my  own  com- 
pany, comprise  my  assets.  My  corporation  has  a  paid-in 
capital  stock  of  sixty-eight  thousand  dollars,  has  paid 


76        TURNING    POINTS    IN    MANAGEMENT 

fifteen  per  cent  dividends  in  fifteen  months  and  has  a 
surplus  of  seventeen  thousand  dollars  at  the  present  time. 
In  the  three  and  a  half  years  that  I  have  been  in  busi- 
ness in  this  city  I  have  made  for  my  investors  over  one 
hundred  thousand  dollars,  and  I  am  safe  in  saying  that 
I  am  worth  twenty-five  thousand  dollars  in  cash  today. 
I  employ  seven  agents  who  handle  different  tracts  under 
my  directions. 

There  are  a  number  of  successful  real  estate  men  in 
this  city,  men  who  have  been  in  business  here  for  a  good 
many  years.  I  believe  that  my  success  in  just  three  and 
one-half  years  was  largely  due  to  the  fact  that  I  saw 
the  strategic  trend  of  the  city's  growth  and  planned 
accordingly. 

THE  SHOE  MERCHANT:  Starting  in  without  funds 
except  for  savings  from  his  salary  as  a  clerk,  in 
six  years  he  owned  two  stores  carrying  stocks  worth  twenty 
thousand  dollars.  His  successful  executive  policies  ar- 
ranged his  customers  in  classes  according  to  their  wants 
and  bought  quick-selling  stocks  to  fit  these  definite  needs. 

A  clerkship  in  this  store  was  my  beginning  in  busi- 
ness. My  brother,  who  was  a  traveling  man,  told  me 
of  the  opportunity.  I  came  here  and  went  to  work  on 
a  salary. 

After  six  years  the  owner  of  the  store  wanted  to  sell 
out.  He  carried  a  seven  thousand  dollar  stock.  I  could 
not  buy  it  all,  and  I  believed  that  I  wanted  only  four 
thousand  dollars'  worth.  Our  trade  did  not  call  for  the 
kind  of  goods  represented  by  the  other  three  thousand 
dollars.  So  I  offered  to  buy  what  I  knew  I  could  sell. 
My  employer  accepted.  I  had  one  thousand  dollars  of 
my  own,  and  I  borrowed  the  rest,  my  relatives  signing 
my  paper  as  security.  My  present  stock  in  this  store  is 
not  less  than  ten  thousand  dollars. 


HOW    SIX    OWNERS    MADE    GOOD  77 

As  a  clerk  I  wondered  why  my  employer  would  not 
consider  the  offerings  of  other  salesmen  who  came  into 
the  store.  He  had  his  way  of  buying  from  houses  that 
had  treated  him  well,  and  he  did  not  care  to  change.  I 
adopted  the  policy  of  listening  to  every  salesman  who 
came  to  sell  me  a  bill  of  goods.  As  a  result  I  have  taken 
on  several  new  lines  which  are  remarkable  "trade  pull- 
ers." Then,  the  advantage  of  comparing  prices  and 
values  has  been  another  elenfent  which  has  helped  me 
build  up  my  present  business. 

I  saw  that,  with  greater  buying  power,  I  could  get 
better  prices.  The  city  of  my  nativity,  fifty  miles  away, 
where  most  of  my  relatives  are  living,  seemed  to  offer  an 
opening  for  a  shoe  store  that  carried  many  lines.  I 
started  a  store  there  three  years  ago  and  was  able  to 
obtain  most  of  the  stock  on  time  from  the  houses  with 
which  I  was  doing  business. 

I  determine  values  by  comparison  in  selecting  my 
lines.  I  take  the  trade  papers  and  am  well  versed  in 
leathers.  I  also  follow  the  market.  I  decide  upon  my 
styles  by  keeping  the  customers  in  mind.  I  never  buy 
merely  because  I  am  told  that  an  article  will  be  a  seller. 
I  figure  that  out  for  myself.  Often  I  ask  for  a  special 
assortment  and  insist  upon  it. 

I  make  my  stores  attractive,  display  my  shoes  in  boxes 
with  my  own  label  on  them,  and  conduct  regular  season- 
end  sales.  I  try  to  give  the  trade  what  it  wants.  On 
a  number  of  occasions  I  have  told  customers  that  I  did 
not  think  they  wanted  a  certain  pair  of  shoes  which  they 
had  asked  for  and  I  explained  why. 

This  may  seem  like  "poor  policy"  to  some,  but  I  have 
made  good  on  it  during  the  past  six  years. 

I  handle  shoes  ranging  in  price  from  two  dollars  to 
eight  dollars  a  pair.    To  the  better  class  of  trade  I  do 


78        TURNING    POINTS     IN    MANAGEMENT 

not  hesitate  to  speak  of  the  superior  wearing  qualities 
of  the  higher  priced  shoes. 

If  the  right  location  can  be  found,  I  will  open  up  a 
third  store.  I  am  now  in  a  position  to  do  this  with  my 
own  capital.  My  head  clerk  here  has  proved  himself  re- 
liable.   I  am  going  to  give  him  the  managership. 

THE  CIGAR  DEALER:  His  initial  capital  was 
three  years'  experience  as  a  salesman,  and  with  it  he 
has  built  up  a  trade,  which,  after  four  years,  nets  him 
over  $2,500  annually.  He  found  that  retail  management 
requires  that  you  place  your  store  in  the  right  place  and 
then  fill  it  with  stock  fitted  carefully  to  the  demand  of  the 
prospects  who  pass  this  place. 

After  clerking  three  years  in  the  largest  tobacco  shop 
in  this  city,  I  decided  to  go  into  business  for  myself.  I 
secured  a  location — a  store  on  a  side  street  where  cigars 
and  tobacco  had  been  sold  for  some  time — went  deep 
into  debt  to  buy  my  stock,  and  opened  up  for  business. 

I  sold  more  tobacco  than  my  predecessor  had  done, 
but  the  stand  did  not  draw ;  at  least,  that  is  what  I  con- 
cluded. Then  I  analyzed  my  sales  and  found  that  while 
the  stand  had  a  large  tobacco  trade  (in  which  there  is 
very  little  profit),  the  cigar  end  of  the  business  was  not 
what  it  should  be.  I  stuck  to  the  location  for  another 
year  and  lost  in  all  during  the  two  years  that  I  was 
there  three  thousand  dollars. 

Then  I  bestirred  myself  to  find  a  new  location  on  the 
main  street.  I  was  able  to  secure  a  well-lighted  store  in 
the  very  heart  of  the  traffic  of  this  city,  where  there  is 
a  good  deal  of  transient  trade.  I  had  no  difficulty  in 
selling  my  old  store  for  about  what  I  paid. 

I  have  been  in  the  new  location  two  years.  My  profits 
for  the  last  year  were  twenty-five  hundred  dollars.  The 
present  stand  is  the  only  one  within  a  radius  of  three 


HOW    SIX    OWNERS    MADE    GOOD  79 

blocks,  and  I  am  sure  to  make  even  more  money  in  the 
future.  I  have  stocked  up  on  several  high-grade  brands 
and  I  get  the  box  trade  of  this  city.  No  one  had  ever 
made  a  systematic  campaign  for  this  business.  I  find 
that  men  who  buy  cigars  by  the  box  will  buy  a  good 
brand  if  it  is  called  to  their  attention. 

While  there  is  not  a  great  deal  in  the  box  trade,  there 
is  an  important  advertising  asset  in  it.  Mr.  Brown,  for 
example,  who  is  a  business  man,  has  bought  my  cigars 
and  has  spoken  to  his  friends  of  the  special  brand  that 
he  likes.  I  know  this  because  customers  ask  for  the 
"cigar  that  Mr.  Brown  smokes."  I  have  been  able  to 
have  my  goods  advertised  in  this  way. 

It  took  me  four  years  to  find  out  that,  to  make  a  cigar 
stand  a  paying  proposition,  I  must  locate  in  the  place 
where  people  pass  many  times  daily.  Transient  trade  is 
often  the  life  of  a  retail  cigar  business. 

THE  CLOTHIERS :  They  had  a  ten  thousand  dollar 
stock  at  the  start — half  borrowed  and  half  saved  from 
salaries  as  clerks.  Their  firm  netted  fourteen  thousand 
dollars  the  first  two  years.  They  found  that  as  an  execu- 
tive each  fitted  best  at  the  manager's  desk  in  the  depart- 
ment about  which  he  knew  most.  Then  they  coupled  this 
specialized  ability  with  unusual  buying  facilities. 

Five  of  us,  young  men,  appreciating  that  we  had 
reached  our*  limit  working  for  the  big  store  in  this  city, 
decided  to  start  in  business  for  ourselves.  When  an  op- 
portunity to  locate  on  the  main  street  presented  itself, 
we  took  immediate  advantage  of  it.  To  overcome  the 
high  rent,  we  leased  the  entire  building  and  sublet  the 
upper  floors. 

We  incorporated  for  ten  thousand  dollars,  half  of 
which  was  subscribed  by  an  outside  man  who  was  and  is 
in  the  clothing  business  in  another  city.    This  step  en- 


80        TURNING    POINTS    IN    MANAGEMENT 

abled  us  to  get  an  inside  tip  on  buying,  because  this  man 
operates  six  stores.  The  other  five  thousand  dollars  came 
from  our  savings.  We  are  now  in  our  third  year.  Our 
net  income  for  the  first  two  years  in  business  was  four- 
teen thousand  dollars. 

Our  success  is  due  to  the  capitalization  of  our  own 
personalities  and  our  ability  as  buyers  of  saleable  goods. 

Each  of  us,  when  in  the  big  store,  supervised  a  special 
department.  When  we  started  our  own  store,  each  of  us 
became  the  head  of  his  special  department.  I  knew  the 
most  about  the  buying,  so  I  took  that  end  of  the  busi- 
ness. At  the  same  time  I  always  give  the  department 
head  his  voice  in  the  matter.  Another  man  is  in  complete 
charge  of  the  haberdashery  department;  he  does  all  of 
the  buying  for  that  department  because  he  knows  most 
about  it. 

A  third  member  of  our  firm  is  card  writer  and  window 
decorator  and  is  an  expert  in  the  boys'  department.  The 
fourth  man  devotes  his  time  to  the  books  and  handles  the 
advertising.  The  fifth  man  looks  after  the  clothing  de- 
partment and  hires  the  help.  Each  one  of  us  brought 
his  quota  of  strength  and  stability  into  the  business  and 
made  it  possible  for  us  to  start  out  without  hiring  any 
clerks  at  a  high  salary. 

The  buying  power  was  likewise  an  important  asset. 
Most  of  the  clothing  stores  in  this  city  have  secured  ex- 
clusive lines  because  they  are  old  firms  of  long  standing. 
By  arrangement  with  the  out-of-town  clothing  merchant 
(or  silent  partner)  we  were  able  to  get  staples  which  we 
could  not  have  obtained  if  we  had  not  formed  the  alli- 
ance. A  shirt,  for  example,  well  advertised,  was  handled 
by  the  big  store.  The  trade  wanted  that  shirt.  How 
could  we  get  it?  Through  our  outside  man  who  was 
operating  six  big  stores  in  a  city  of  five  hundred  thou- 


HOW    SIX    OWNERS    MADE    GOOD  81 

sand  inhabitants,  we  found  the  way. 

Did  our  local  competitors  complain  to  the  manufac- 
turer? Yes.  What  did  the  manufacturer  say?  "We 
can  not  turn  down  a  man  like  Mr.  Williams,  who  operates 
six  stores."  Result:  we  got  the  shirt.  Such  was  the 
case  with  many  other  articles  that  we  wanted  to  handle. 
We  are  able  to  get  our  staples  and  even  our  special  goods, 
suits  and  underwear  at  figures  that  are  putting  our  com- 
petitors in  a  secondary  position.  We  advertise  our  su- 
perior buying  power — a  power  that  enables  us  to  give 
greater  values  for  less  money.  And  we  are  getting 
the  crowd. 

THE  FURNITURE  DEALER:  With  one  thousand 
five  hundred  dollars  as  a  starting  bank  account,  he 
built  up  in  eighteen  months  annual  gross  sales  of  fifteen 
thousand  dollars.  He  decided  upon  definite  management 
policies  in  his  buying,  selling  and  advertising. 

As  local  manager  for  a  syndicate  of  manufacturers, 
I  learned  a  lot  about  selling  and  local  conditions  here. 
When  these  men  disagreed  and  the  chain  of  stores  was 
given  up,  this  store  was  on  a  paying  basis.  I  decided 
to  reopen  at  the  old  stand.  I  had  fifteen  hundred  dollars 
of  my  own  and  used  over  half  of  it  to  remodel  the  place. 
Despite  my  small  capital,  I  have  built  up  a  fifteen  thou- 
sand dollar  business  in  a  year  and  a  half. 

This  is  how  I  did  it: 

First:  I  displayed  prominently  a  few  articles  of  the 
first  quality  and  kept  plenty  of  cheaper  goods  in  the 
background. 

Second :  I  made  my  buying  policy  essential.  Factories 
that  made  furniture  with  individuality  and  "selling 
points,"  often  give  a  special  price  to  introduce  their 
goods. 

A  concern  in  the  East  manufactures  articles  similar  to 


82        TURNING    POINTS    IN     MANAGEMENT 

those  made  at  Grand  Rapids.  This  eastern  concern  was 
not  represented  in  this  section,  and  I  was  able  to  secure 
the  line  on  consignment  at  a  reasonable  saving. 

In  this  way  my  big  savings  have  been  made  in  buying. 
I  aimed  to  get  good  furniture  from  manufacturers  who 
were  not  represented  in  this  locality. 

Third :  My  store  is  small,  somewhat  crowded,  but  the 
articles  move  rapidly.  This  makes  an  impression  on 
those  who  call.  The  arrangement  makes  the  visitor  inter- 
ested. People  look  at  the  goods  and  often  buy  articles 
which  they  never  intended  to  buy  when  they  came  into 
the  store.  Instead  of  using  three  floors,  as  several  of  my 
competitors  have,  I  keep  everything  in  sight  on  one  floor 
only.    Thus  the  customers  get  ideas  for  purchases. 

Fourth:  In  selling,  I  hold  the  prospect  until  I  know 
what  he  wants,  what  he  feels  that  he  can  pay,  and  where 
he  wants  to  put  the  article  which  he  intends  to  buy. 
Then  I  find  out  what  he  has  already  in  the  room  at  home. 
This  helps  to  make  a  satisfied  customer  and  sell  goods. 

Fifth :  In  advertising  in  the  local  papers  I  never  say 
anything  unless  I  have  something  to  offer.  There  is 
always  a  "special"  connected  with  all  of  my  advertising. 
I  never  advertise  the  arrival  of  a  certain  line.  When  I 
advertise  a  line,  for  example,  I  have  a  special  in  that 
line  at  a  marked  saving. 

THE  ELEVATOR  MANUFACTURERS:  Launch- 
ing out  vrith  only  their  savings — little  more  than  ten 
thousand  dollars — a  salesman  and  an  engineer  established 
a  paying  business.  Their  executive  methods  for  handling 
their  market,  fixing  their  standards,  analyzing  their  prod- 
uct and  selecting  a  location  for  their  factory,  guided 
them  to  success. 

Definite  plans  sometimes  go  to  pieces  in  the  face  of 
circumstances.  My  partner  and  I  had  laid  out  a  careful 
program  for  the  starting  of  our  business  when  oppor- 


HOW    SIX    OWNERS    MADE    GOOD  83 

tunity  came  along  and  telescoped  it.  He  was  a  shop  fore- 
man who  had  plugged  through  an  engineering  course  by 
night  study,  and  I  was  a  special  salesman  for  a  big  trans- 
mission machinery  house.  We  were  close  friends,  and  for 
a  long  time  it  was  understood  that  sooner  or  later,  when 
the  chance  came,  we  would  launch  out  for  ourselves 
together. 

"We  had  only  what  we  had  saved  from  our  salaries 
(about  five  thousand  apiece),  and  we  knew  that  wouldn't 
go  far  in  starting  a  business.  So  we  decided  to  limit  our- 
selves to  one  circumscribed  field  and  make  good  in  tha* 
before  we  branched  out  into  others.  I  knew  elevating 
machinery  from  the  ground  up.  Neither  my  own  firm 
nor  any  of  its  competitors  had  a  line  that  couldn't  be 
bettered  and  made  more  cheaply.  Most  of  the  stuff  had 
been  designed  originally  for  special  jobs  and  later  made 
a  part  of  the  regular  line.  In  consequence,  many  of  the 
parts  were  twice  as  heavy  as  they  needed  to  be.  The 
idea  of  getting  into  the  game  myself  came  to  me ;  in  fact, 
after  I  had  tried  a  dozen  times  to  get  our  house  to  re- 
design our  whole  line  in  order  to  cut  production  costs 
and  turn  out  uniform  equipment. 

The  house  refused,  and  after  talking  the  thing  over 
for  about  a  year,  my  partner  and  I  agreed  that  we'd 
use  my  idea  for  the  cornerstone  of  our  venture.  There 
was  no  hurry — the  longer  we  put  off  starting  the  more 
capital  we  would  have — and  we  put  in  our  spare  time  de- 
signing and  redesigning  the  machinery  we  proposed  to 
build.  I  knew  elevator  conditions,  while  his  work  and 
study  had  made  him  a  sound  engineer.  "We  kept  three 
things  in  mind — the  work  the  machinery  must  do,  cost 
of  production  and  ease  of  installing  it.  We  made  pro- 
vision for  strength  and  efficiency  first;  then  analyzed 
each  part  from  the  shop  side  to  get  simplicity  and  re- 


84        TURNING    POINTS    IN    MANAGEMENT 

duce  cost  both  of  materials  and  labor.  We  kept  a 
draftsman  busy  six  months  on  outfits  for  small  and 
medium-sized  elevators.  Then,  when  we  were  sure  we 
were  right,  we  had  our  patterns  made  and  even  selected 
or  designed  the  machine  tools,  jigs  and  gauges  we  would 
need.  This  preliminary  work  cost  us  nearly  three  thou- 
sand dollars. 

We  were  keeping  in  touch  with  the  towns  on  the  look- 
out for  new  industries,  though  we  could  see  no  imme- 
diate prospect  for  starting.  Then  while  my  partner 
was  up  in  South  Dakota  attending  a  funeral,  he  got 
wind  of  a  new  string  of  elevators  some  Minneapolis 
men  were  thinking  of  building.  There  would  be  twenty- 
two  of  these,  and  all  but  four  of  them  were  of  capacities 
which  our  ready-to-build  machinery  would  fit.  He  hur- 
ried home  with  the  news.  After  a  lot  of  hard  thinking, 
we  decided  to  pass  up  our  leisurely  program  and,  if  we 
could  land  the  contract,  to  launch  our  business  right 
away.  We  would  need  some  one  big  job  like  this  to  es- 
tablish us ;  the  opportunity  was  too  good  to  lose.  I  had 
a  frank  talk  with  our  manager.  He  tried  to  dissuade 
me,  but  in  the  end  allowed  me  to  resign. 

I  landed  the  Minneapolis  crowd.  We  had  to  give  a 
stiff  bond  as  security  for  fulfilment  of  the  contract.  But 
the  order  was  ours,  the  paper  profit  looked  good  and  we 
were  launched. 

Making  good  on  that  contract  established  us  in  the 
trade.  The  time  and  care  we  spent  on  our  designs,  too, 
have  paid  big  dividends ;  our  production  costs  are  lower 
than  the  average  and  the  clean  symmetry  of  our  outfits 
is  a  strong  selling  point. 

What  brought  us  to  success?  Four  things,  I  think. 
Choice  of  a  special  field  not  pre-empted  by  any  other 
firm,  and  concentration  on  that  field.    Analysis  of  con- 


HOW    SIX    OWNERS    MADE    GOOD  85 

ditions  and  the  designing  of  our  product,  not  merely  to 
satisfy  those  conditions,  but  also  to  create  better  condi- 
tions. The  fixing  of  standards — not  only  from  the  qual- 
ity and  performance  side — but  also  from  the  cost  and 
production  angles.  Choice  of  a  location,  lastly — also  a 
factor  where  a  man's  personality  counts  for  and  supple- 
ments his  capital. 


# 


CUCCESSFUL  founders  of  business  have  been  those  men 
^  who  have  radiated  their  personalities  through  the  struc- 
tures of  trade  which  they  built.  Their  policies  and  their 
methods  thus  were  given  additional  momentum  and  their  per- 
sonal  magnetism  became  an  instrument  unifying  employees 
and  attracting  customers  This  power  has  caused  every 
employee  in  such  an  establishment  to  give  to  the  business  and 
to  his  particular  work  the  best  there  was  in  him.  And  the 
man  who  can  secure  that  individual  effort,  general  team  work 
and  loyalty  from  those  he  employs  is  the  man  who  wins.  For 
a  great  machine  is  the  more  nearly  perfect  as  its  every  part, 
even  the  smallest  wheel  or  rod,  moves  in  unison  and  with  the 
least  possible  friction. 

— George  H.  Barbour 

First  Vice-Prmident,  Michigan  Store  Company 


VIII 

HOW  I  WENT  INTO  BUSINESS 
FOR  MYSELF 


By 

Albert  Hoefeld.  President,  Albert  Hoefeld   Incorporated 

Vincent  C.  Price.  Founder,  Price  Baking  Powder  Company 

Joseph  E.  Haskell,  President    Haskell  Brothers 
Benjamin  F.  DeMuth,  Formerly  of  DeMuth  and  Company 


WHEN  you  pass  John  Wanamaker's  great  stores,  or 
Claflin's  large  warehouses,  or  McCormick's 
widespreading  factories — their  bigness  repels  you. 
"What  can  I  learn  from  them — they  are  so  large?"  you 
ask. 

But  they  and  all  other  of  America's  industries  had  a 
beginning — a  small  one  always,  and  probably  not  more 
than  a  generation  away.  How  they  started — that  can 
give  you  suggestions  and  help  in  your  work  today. 

So  four  successful,  self-made  business  builders  in  va- 
rious lines  here  tell  you  the  opportunity  and  incentive 
that  led  them  to  break  away  from  the  employee  ranks 
and  go  into  business  for  themselves,  the  training  and 
policies  and  methods  that  made  it  possible  for  them  to 
win  success. 

Not  men  whose  business  climbs  into  tens  of  millions  of 
dollars  and  thousands  of  workmen  have  been  selected  to 
tell  these  stories,  but  those  whose  business  are  of  a  size 
that  will  afford  you  a  model,  a  plan  and  method  for  your 
own  business. 

And  these  concerns  are  on  the  "firing  line"  today.  What 
they  are  accomplishing  can  be  analyzed  for  your  needs, 


IN    BUSINESS    FOR    MYSELF 87 

your  contingencies  and  your  problems  today.  For  in  no 
feature  are  things  so  similar  as  in  their  beginnings. 
They  shoot  off  in  all  directions,  at  every  angle,  but  the 
start  is  pretty  much  from  the  same  point.  So  the  stories 
of  these  beginners  in  business  may  show  you  that  your 
conditions  are  right  for  starting  a  business,  a  new  de- 
partment, a  different  line  of  work. 

ALBERT  HOEFELD:  Twenty-five  years  ago  Mr. 
Hoefeld  was  a  clerk  in  a  hat  store.  Today  he  owns 
four  large  men's  furnishings  stores,  located  on  four  of 
Chicago's  busiest  downtown  corners.  In  a  line  where 
competition  is  keen  and  margins  small,  he  has  built  up  a 
large  business  with  a  selling  force  of  fifty  men  and  has 
become  a  power  in  the  men's  furnishings  trade  of  the  city. 

A  quarter  of  a  century  ago  I  came  to  Chicago  from 
Germany,  where  I  was  born.  For  a  while  I  worked  for 
a  clothing  manufacturer.  But  that  didn't  offer  me  the 
experience  I  wished.  I  had  my  purpose :  some  day  I  in- 
tended to  go  into  business  for  myself.  To  do  that  I 
needed  to  learn  how  to  sell  goods. 

I  talked  about  this  ambition  of  mine  with  my  friend 
Mr.  Lelewer,  the  hatter.  He  offered  me  a  place  in  his 
store. 

This  was  really  the  beginning  of  my  business  career, 
for  only  then  did  I  begin  to  acquire  the  experience  that 
enabled  me  to  carry  on  a  business  afterward.  The  store 
had  a  men's  furnishings  department,  and  to  that  end  of 
the  business  I  gave  most  attention. 

As  I  look  back  I  can  see  that  I  was  different  from 
many  clerks.  I  was  eager  to  learn,  for  I  had  a  definite 
aim.  For  instance,  I  undertook  at  once  to  trim  windows 
— something  which  most  clerks  avoid  because  they  don't 
want  to  be  kept  in  the  store  until  ten  or  eleven  at  night. 
They  think  they  aren't  hired  for  this.    With  me  it  wasn't 


88        TURNING    POINTS    IN    MANAGEMENT 

a  question  of  what  I  was  hired  for;  it  was  a  question 
of  how  much  I  could  learn. 

I  was  on  the  lookout,  too,  for  ideas.  I  remember  that 
I  conceived  the  plan  of  installing  apparatus  for  ironing 
silk  hats,  instead  of  sending  them  out.  This  idea  enabled 
us  to  keep  fifty  cents  in  the  drawer  for  every  hat  we 
ironed,  instead  of  turning  it  over  to  somebody  else.  Just 
such  things  as  these  gave  me  the  confidence  of  my  em- 
ployer, and  in  six  months  I  was  doing  all  the  buying  for 
the  furnishings  department. 

This  department  became  too  big  for  our  quarters  and 
we  leased  another  store  for  it,  at  130  Dearborn  Street. 
There  never  was  any  question  as  to  who  should  run  the 
new  store.  Although  my  employer  had  men  who  had 
been  in  his  service  longer  than  I,  he  offered  me  the  posi- 
tion— on  either  a  salary  or  a  commission  basis. 

"I'll  take  the  commission,"  I  told  him.  It  was  almost 
like  being  in  business  for  myself.  To  all  intents,  I  was 
proprietor,  and  most  of  our  customers  supposed  me  to 
be. 

Our  rent  was  soon  after  this  raised  from  $3,300  to 
$4,800.  We  considered  this  exorbitant  and  refused  to  re- 
new the  lease.  I  thought  this  a  good  time  to  start  out 
for  myself  in  reality,  but  when  I  brought  it  up  to  Mr. 
Lelewer  he  made  an  offer  which  I  accepted ;  the  business 
was  to  be  conducted  in  the  old  name,  but  I  was  to  be  a 
partner,  with  the  privilege  of  taking  complete  control  as 
soon  as  I  wanted  it. 

We  found  a  location  on  La  Salle  Street,  just  south  of 
Madison,  and  moved  there.  A  year  later  we  moved 
around  the  corner  to  a  Madison  street  frontage  we  had 
leased  a  year  in  advance,  not  being  able  to  get  it  at  first, 
and  later  we  occupied  the  corner  basement  store. 

Meanwhile  I  found  myself  able  to  take  over  the  busi- 


IN"  BUSINESS    FOR    MYSELF 89 

ness.  We  took  stock ;  I  had  $3,000  in  it  and  Mr.  Lelewer 
$1,500.  Then  one  after  another,  I  have  opened  three 
large  stores,  in  addition  to  my  first  quarters,  which  I 
still  occupy. 

But  success  in  business  is  not  merely  a  matter  of  get- 
ting started.  I  did  go  into  business  on  the  right  basis. 
I  took  all  the  steps  that  proper  experience  and  testing  re- 
quire— first  as  a  salaried  clerk,  then  a  department  man- 
ager, next  on  a  commission  basis,  then  as  a  partner, 
finally  as  controlling  owner.  But  after  I  went  in  busi- 
ness for  myself,  I  had  to  learn  to  run  it. 

I  have  always  conducted  my  business  on  the  theory 
that  merchandise  is  not  the  best  liquid  asset,  and  that 
it  is  bad  policy  for  a  merchant  to  tie  up  all  his  resources 
in  that  way.  Since  my  second  year,  I  have  religiously 
withdrawn  a  fair  proportion  of  my  profits  and  invested 
it  in  securities.  In  an  emergency,  I  could  get  money 
immediately  by  sacrificing  a  little,  say  ten  per  cent.  But 
if  I  had  only  merchandise  I  would  have  to  sacrifice  fifty 
per  cent  or  more. 

I  borrow  at  times,  but  never  for  the  purposes  of  ex- 
pansion. For  example,  goods  are  sold,  say  at  six-ten,  or 
five-thirty.  By  paying  thirty  days  before  due,  I  can  save 
five  per  cent  in  that  period,  while  I  can  borrow  at  the 
bank  at  five  per  cent  per  annum.  Or,  by  taking  advan- 
tage of  datings  I  get  goods  in  March,  say,  dated  May  1. 
By  the  latter  date,  I  will  have  sold  a  lot  of  them,  without 
having  paid  out  any  money. 

These  are  advantages  of  credit,  and  credit  has  been 
one  of  my  fundamental  principles  since  the  beginning. 
A  merchant  is  always  ahead  of  the  game,  instead  of  be- 
hind it,  when  his  credit  is  good  and  he  knows  he  can 
meet  every  promise.  If  I  have  $10,000  in  cash  in  the 
fall,  I  buy  bonds  with  it,  instead  of  leaving  it  in  my 


90       TURNING    POINTS    IN    MANAGEMENT 

bank  account  until  spring.  Then  I  borrow  from  the 
bank  to  buy  my  spring  goods. 

By  starting  this  plan  at  the  foundation  of  a  business 
it  works  automatically,  provided  the  business  is  paying 
at  all,  and  the  surplus  expands  along  with  the  business. 
The  reserve  ought  to  grow  as  fast  as  the  store.  In  my 
own  business,  I  aim  to  keep  the  surplus  liberal.  At 
times  it  has  exceeded  the  sum  I  had  in  my  business. 
There  would  be  fewer  failures  if  merchants  would  check 
the  tendency  to  let  their  businesses  run  away  with  them. 

In  starting  my  stores,  I  have  always  sought  good  loca- 
tions. I  believe  in  getting  into  the  heart  of  things — 
going  where  the  markets  are.  Originally,  I  intended  to 
establish  my  business  in  Seattle,  but  Mr.  Lelewer  dis- 
suaded me.  "You  can  do  anything  in  Chicago  that  you 
can  do  in  Seattle,"  he  said. 

His  advice  was  sound.  Men  sometimes  run  away  from 
their  opportunities,  imagining  that  somewhere  else  they 
will  find  big  profits  and  smooth  sailing.  Where  there  are 
people  and  markets  for  goods,  a  merchant  can  sell. 

tTINCENT  C.  PRICE;  Over  a  half  century  ago  Dr. 
V  Price  gave  up  the  -practice  of  medicine  in  New  York 
state  to  become  a  chemist,  and  from  that  he  graduated  into 
the  manufacture  of  a  baking  powder.  This  he  developed 
into  one  of  the  largest  industries  of  its  kind;  then  he  sold 
this  business,  which  began  in  a  kitchen,  for  a  million 
and  a  half  dollars  and  went  into  the  manufacture  of  other 
food  products. 

It  was  a  necessity  of  the  kitchen  that  led  to  the  found- 
ing of  my  business,  and  which  led,  ultimately,  to  the 
largest  profits  ever  made  from  a  single  factory  product. 

When  I  was  studying  pharmacy  at  Troy,  New  York, 
my  mother  suffered  from  dyspepsia.  She  could  not  eat 
yeast  bread,  so  I  gave  my  attention  to  discovering  a  sub- 


IN    BUSINESS    FOR    MYSELF 91 

stitute.  The  result  was  my  baking  powder.  I  did  not 
then  contemplate  its  manufacture  for  sale,  but  I  began  to 
make  it  in  small  quantities  at  my  laboratory  in  Troy.  I 
sold  it  only  in  bulk,  and  in  a  minor  way,  for  several 
years ;  but  the  impression  was  growing  on  me  that  I  had 
an  article  of  real  value  in  the  household,  and  I  decided 
to  go  west  where  the  opportunity  would  be  better.  I 
thought  Chicago  too  big  for  my  resources,  so  I  selected 
Waukegan,  Illinois. 

I  had  three  thousand  dollars  in  cash,  which  had  come 
to  me  through  relatives.  I  rented  a  small  building  and 
began,  for  the  first  time,  to  make  baking  powder  as  a 
business.  I  was  sure  of  my  product,  for  it  had  proved 
itself  countless  times. 

But  against  my  own  confidence  was  arrayed  absolute 
indifference  on  the  part  of  the  public.  My  markets 
were  wholly  undeveloped,  my  name  was  unknown,  and 
success  was  dependent  on  building  up  a  desire  for  my 
product.    How  to  do  this  was  the  problem. 

One  day  I  put  up  a  lot  of  samples  in  envelopes,  each 
sufficient  for  one  quart  of  flour,  and  went  to  Milwaukee. 
I  visited  all  the  hotels  and  left  my  samples  with  the 
cooks,  without  charge.  Then  I  canvassed  the  principal 
grocery  stores  and  distributed  more  samples,  to  be  given 
away  to  customers.  I  talked  with  the  grocers  and  told 
them  that  if  they  would  follow  the  thing  up,  they  would 
make  money  by  it.  I  explained  the  advantages  of  my 
product  over  the  slow-rising  yeast,  and  predicted  a  big 
demand  as  soon  as  housewives  began  to  realize  what  it 
meant  to  them.  Of  course  I  did  not  dream,  then,  of  the 
tremendous  success  that  was  to  come,  but  I  did  feel  sure 
of  building  a  good  business. 

Within  a  few  days  I  heard  from  the  Milwaukee  hotels. 
They  wanted  more  of  the  baking  powder.    Orders  from 


92        TURNING    POINTS    IN     MANAGEMENT 

grocers  followed  speedily.  Then  I  got  out  more  samples, 
hiring  men  to  distribute  them.  I  began  to  circularize, 
too.  I  kept  up  both  plans  steadily,  enlarging  my  sphere 
of  action  as  the  orders  increased. 

During  the  succeeding  two  years  I  made  a  little 
money  over  operating  and  living  expenses.  Both  of 
these  items  were  extremely  low.  If  I  had  not  kept  them 
down  to  bed-rock,  I  could  not  have  continued.  I  was 
resolved  to  keep  the  business  within  its  income,  no  mat- 
ter how  low  that  income  might  be.  But  I  continued 
pounding  away  at  the  trade,  and  kept  out  of  debt.  And 
all  the  time  the  orders  increased. 

Later  I  decided  that  Chicago  was  the  best  field.  The 
city,  not  the  country,  I  had  discovered,  took  most  kindly 
to  my  article.  So  I  moved  my  little  plant  there,  and 
continued  the  same  line  of  campaign — samples,  circulars, 
and  personal  solicitation. 

Then  next  I  began  advertising  in  the  newspapers.  I 
was  cautious  at  first,  though  ultimately  I  spent  three  or 
four  million  dollars  for  space. 

At  the  time  I  began  to  advertise,  I  had  a  partner  who 
did  not  believe  in  this  form  of  campaign.  He  thought  it 
was  throwing  away  money.  As  we  could  not  agree,  I 
bought  him  out.  To  me,  publicity  had  always  seemed 
the  logical  way,  provided  it  was  consistent  with  the  re- 
sources of  the  business  itself.  And  newspaper  space 
was  merely  an  expansion  of  my  circularization  policy,  on 
which  I  had  largely  built  the  business.  However,  I 
did  not  believe  in  plunging.  My  great  volume  of  pub- 
licity grew  as  the  business  grew.  In  my  other  and  later 
enterprises — flavoring  extracts  and  cereal  foods — I  have 
followed  the  same  policy  of  working  along  the  lines  of 
least  resistance.  For  example,  if  I  found  Texas  the 
most  susceptible  to  a  campaign  or  product,  I  devoted 


IN    BUSINESS    FOR     MYSELF 


my  energies  to  Texas  and  left  Chicago  for  a  later  period. 

Finally  I  sold  out  for  $1,500,000,  but  since  then  the 
consolidated  companies  have  developed  the  field  in  an 
extraordinary  manner,  and  have  taken  out  of  it  in  profits 
more  in  a  year  than  I  received  for  the  business. 

The  underlying  element  in  my  success  lay  in  having  a 
product  of  real  benefit  to  mankind,  and  in  making  the 
price  low  enough  to  be  within  the  reach  of  rich  and  poor. 
My  greatest  obstacle  was  to  convince  people  that  my 
article  really  was  a  benefit.  I  would  not  have  succeeded 
without  confidence  in  my  goods  and  patience  and  per- 
sistence, and  a  steadfast  resolution  to  make  every  step 
pay  for  itself  before  I  took  another. 

I  believe  that  most  men  fail  because  they  try  to  do  too 
much.  They  are  not  satisfied  to  start  in  a  small  way, 
and  to  develop  a  business  consistently.  They  begin  with 
impossible  expenses  and  a  top-heavy  organization,  and 
are  swamped  before  they  get  their  markets.  And  quite 
as  important  as  anything,  they  are  not  content  to  live 
according  to  their  business. 

JOSEPH  E.  HASKELL:  Right  after  the  Civil  War, 
Joseph  E.  Haskell  and  his  brother  took  their  capital 
of  one  hundred  and  fifty  dollars  and  started  a  little  trunk 
factory  in  a  basement.  Quality  in  product,  square  treat- 
ment, holding  expenses  down,  keeping  expansion  within 
the  bounds  of  credit — these  things  built  the  business. 

In  my  youthful  days  I  worked  at  various  occupations 
— farming,  milling — and  in  a  trunk  factory.  It  was  my 
work  here  that  turned  my  thoughts  toward  the  oppor- 
tunity in  this  business. 

It  was  at  the  close  of  the  Civil  War,  and  there  was  an 
immense  demand  for  trunks  of  the  cheaper  kinds. 
Soldiers  were  returning  to  their  homes  and  spending 
their  money  liberally.    My  brother  and  I,  together,  had 


94        TURNING    POINTS    IN    MANAGEMENT 

less  than  one  hundred  and  fifty  dollars  capital.  He  was 
a  salesman;  I  a  practical  trunk  maker. 

"We  believed  the  market  was  at  hand,  our  joint  knowl- 
edge of  the  business  and  experience  adequate,  our  oppor- 
tunity favorable.  So  we  started  a  little  shop  in  a  base- 
ment. I  was  the  only  workman — my  brother  the  only 
salesman. 

Our  early  obstacles  lay  in  obtaining  the  confidence 
of  customers  and  creditors.  There  is  only  one  way  to  do 
this :  avoid  everything  that  savors  of  untruth  or  trick- 
ery. Little  things  count  big  sometimes.  And  a  little 
over-shrewdness  toward  a  customer  will  destroy  his  con- 
fidence. I  believe  that  one  of  the  hardest  battles  a  young 
house  can  have  is  to  eliminate  everything  savoring  of 
sharp  practice.  Many  a  business  fails  because  of  the 
cumulative  effect  of  these  little  things — often  laughed  at 
when  they  occur,  as  very  good  jokes. 

Quality  alone  builds  confidence — the  only  guarantee 
of  permanent  business.  Once,  for  instance,  a  customer, 
ordering  twenty  salesmen's  trunks,  said  to  us:  "We 
will  pay  you  three  dollars  a  trunk  more  than  your  price ; 
put  the  extra  money  into  the  goods."  No  specifications 
were  given  us  for  additional  outlay ;  we  were  trusted  to 
produce  the  quality.  Of  course,  the  class  of  trade  must 
be  considered,  but  other  things  being  equal,  quality  is 
most  important.  If  your  product  is  right,  your  business 
will  grow  without  any  haggling  over  prices.  And  to 
maintain  quality,  everlasting  watchfulness  is  necessary. 
I  work  as  hard  now  as  I  did  at  the  beginning. 

"We  expanded  our  business  as  it  grew — and  only  as  it 
grew,  always  having  cash  to  swing  it,  never  borrowing 
any  capital.  I  have  observed  that  prosperity  ruins  more 
men  than  it  benefits.  As  soon  as  they  see  things  coming 
their  way,  they  begin  to  plunge,  and  get  in  too  deep. 


IN    BUSINESS    FOR    MYSELF 95 

They  don't  seem  to  be  able  to  plan  consistently.  Either 
they  go  into  debt,  in  order  to  make  bigger  profits,  or 
they  begin  to  take  life  easy. 

I  have  noticed  this  often  in  partnerships ;  one  partner 
would  be  left  to  carry  the  burden  largely  alone  while 
the  other  took  extended  pleasure  trips.  The  stay-at- 
home  partner,  naturally,  resents  the  situation  and  re* 
laxes  his  own  attention.  The  result  is  indifferent  meth- 
ods, deteriorating  products,  and  loss  of  standing  and 
trade.    Poorly  matched  partners  cause  many  failures. 

Expense  was  an  item  we  watched  closely  at  the  begin-* 
ning,  both  in  business  and  personal  items.  Extravagance 
at  home  is  sure  to  be  reflected  in  the  store  or  factory.  I 
believed  in  saving  at  least  twenty-five  cents  on  every 
dollar  I  earned.  I  see  men  all  around  me  who  are  not 
determined,  safe,  stable;  they  can't  hold  themselves 
down  to  any  particular  plan.  Such  a  man  should  not 
go  into  business  for  himself,  for  then  he  has  no  one  to 
hold  him  to  his  course. 

There  are  two  main  factors  to  success:  first,  the  op- 
portunity; second,  the  ability  to  follow  it  up.  Some 
men  can't  realize  an  opportunity,  while  others  who  are 
competent  to  succeed  lack  the  chance. 

BENJAMIN  F.  DeMUTH:  Forty-five  years  ago,  at 
the  age  of  fourteen,  Mr.  DeMuth  started  working. 
As  retail  clerk,  'partner,  traveling  salesman,  store  manager 
and  owner  of  his  own  store  for  a  quarter  of  a  century,  he 
has  learned  the  ins  and  outs  of  doing  business  and  the 
principles  of  safe  retailing. 

When  I  was  a  boy  I  worked  a  year  in  a  tanyard  in  my 
native  town  in  Ohio.  Then  for  four  years  I  clerked  in 
a  shoe  store.  With  five  hundred  dollars  I  had  saved  I 
went  to  Mt.  Vernon,  Ohio,  and  helped  establish  a  retail 
shoe  business.    My  partner  put  in  three  thousand  five 


96        TURNING    POINTS    IN    MANAGEMENT 

hundred  dollars,  but  he  had  no  knowledge  of  the  shoe 
trade,  so  the  profits  were  divided  equally. 

We  did  well,  but  before  long  my  partner  decided  that 
he  knew  as  much  as  I  about  the  business.  He  proposed 
that  I  put  in  five  hundred  dollars  additional  and  that  he 
draw  out  five  hundred  dollars,  making  my  interest  one 
thousand  dollars  and  his  three  thousand  dollars;  then 
he  wanted  three-quarters  of  the  profits. 

But  I  have  always  considered  knowledge  valuable,  and 
I  had  spent  years  in  the  shoe  and  leather  industry.  I 
knew  all  the  processes  through  which  the  raw  materials 
went,  and  understood  how  shoes  were  made  and  how 
they  were  sold.  I  knew  clerks  who  had  worked  twenty 
years  in  shoe  stores  without  even  knowing  on  which  side 
leather  was  blackened.  I  refused  this  partnership  plan 
and  sold  my  interest  to  him,  so  that  he  might  have  all 
the  profits.  I  was  not  surprised  later  to  learn  of  hia 
failure. 

I  went  to  Cleveland  to  get  work,  securing  it  in  a 
shoe  store  at  ten  dollars  a  week.  I  slept  in  the  store, 
swept  it  out  at  six  in  the  morning,  paid  three  dollars  a 
week  for  my  board,  and  saved  money.  I  was  ambitious 
to  get  up  in  the  shoe  business,  and  I  took  particular 
pains  to  oblige  customers  and  gain  their  good  will.  I  had 
many  regular  patrons,  who  always  asked  to  have  me  wait 
on  them.  In  those  days  we  did  not  deliver  shoes,  and  I 
remember  going  often  in  the  evening  to  make  a  delivery 
of  my  own  volition. 

It  was  these  methods  that  got  me  a  better  position, 
and  ultimately  attracted  the  attention  of  John  H. 
Hanan,  the  Brooklyn  shoe  manufacturer.  After 
eight  years  in  Cleveland,  I  went  to  Cincinnati  and 
started  a  shoe  department  in  a  big  store.  Then  I  went 
on  the  road  for  Mr.  Hanan.     But  this  calling  did  not 


IN    BUSINESS    FOR    MYSELF 97 

suit  me.  The  opportunities  were  not  big  enough,  and  I 
was  forced  to  waste  time  that  I  considered  valuable. 

My  resolution  crystallized  one  morning  in  Rich- 
mond, Indiana.  I  finished  my  business,  and  had  to  wait 
until  evening  for  a  train  to  Indianapolis.  As  I  sat  in 
the  lobby,  idling  away  the  hours,  I  made  up  my  mind 
that  I  would  get  into  a  business  where  I  could  make 
every  day  count.  I  had  stood  this  loafing  job  as  long  as 
I  could. 

"When  I  got  back  to  headquarters  I  told  Mr.  Hanan 
my  decision.  He  had  been  on  the  road,  and  he  agreed 
with  me.  He  said  he  would  back  me  in  going  into  busi- 
ness for  myself  and  proposed  that  we  both  go  to  Chi- 
cago at  once  and  select  a  location,  for  he  believed  the 
opening  in  Chicago  good.  We  acted  on  the  plan,  arrived 
in  Chicago  early  one  morning,  and  found  a  store  before 
we  had  breakfast. 

I  proved  the  opportunity,  and  afterward,  opened  an- 
other store  in  Cleveland — the  finest  in  the  city.  It  was 
the  proudest  day  of  my  life  when  my  first  Cleveland 
employer  came  in  to  see  me. 

The  only  policy  for  a  merchant  to  follow  is  to  carry 
full  quality  and  never  try  to  fool  the  people.  I  know 
a  shoe  dealer  who  always  p.  „  his  1  st-looking  shoes  in 
the  window,  regardless  of  what  he  had  in  stock.  Then 
when  customers  came  in,  he  would  have  to  tell  them, 
often,  that  the  line  was  broken  and  he  didn't  have  their 
size  in  that  particular  shoe,  but  that  he  had  other  shoes 
— and  so  on. 

I  always  say  to  my  men :  ' '  Take  shoes  out  of  the  win- 
dow the  moment  you  find  we  cannot  supply  people  who 
are  attracted  by  them." 

Another  policy  is  truthfulness — to  self  as  well  as  to 
customers.     I  never  tried  to  hoodwink  myself  into  be- 


98        TURNING    POINTS    IN    MANAGEMENT 

Keving  things  I  knew  were  not  so.  For  example,  some 
merchants  count  their  profits  even  though  they  turn 
around  and  put  the  money  back  into  goods.  But  when 
you  analyze  the  proposition,  you  must  see  that  profit 
is  not  a  profit  when  it  is  locked  up  in  stock.  Men  will 
tell  you  how  much  money  they  have  made  in  a  year,  and 
when  you  ask  them  where  it  is  they  will  turn  proudly 
and  point  to  an  immense  lot  of  merchandise.  It  may  be 
a  prospective  profit,  but  not  a  real  profit.  Let  some 
stringency  strike  them,  or  a  fire,  or  any  one  of  a  dozen 
misfortunes,  and  that  boasted  profit  is  wiped  out. 

Some  stores  carry  twice  the  stock  they  should.  I  can 
put  my  finger  on  merchants  who  have  goods  that  have 
been  on  their  shelves  six  or  eight  years.  And  when  they 
invested  some  of  their  earnings  in  that  stock,  they 
merely  credited  profit  and  loss  account  with  what  they 
considered  net  gain.  This  is  the  sort  of  fallacy  that  in- 
flates a  business  like  a  balloon.  It  may  look  like  a  solid, 
dependable  mass,  when  in  reality  it  is  largely  gas. 

I  believe  I  succeeded  by  keeping  down  to  realities. 
I  have  kept  my  stock  fresh,  paid  cash,  taken  a  propor- 
tion of  my  profits  out  of  my  business,  stretched  a  point 
in  favor  of  customers,  advertised,  and  maintained  a 
good  location.  And  business  has  come  to  me  because 
customers  got  what  they  wanted  from  me. 

/CULTIVATE  the  company  of  successful  men.  Choose, 
^-/  -particularly,  the  men  who  have  made  their  mark  in  the 
business  which  you  have  undertaken.  By  rubbing  shoulders 
with  them  you  will  absorb  ideas  which  will  help  you  up  and 
by  the  light  of  their  experience  you  will  be  able  to  avoid  many 
of  the  pitfalls  about  you. 

— Henry  Hewitt 

President,  Hewitt  Land  Company 


THE  OLDEST  STORE 
IN  NEW  YORK 

(described  in  chapter  ix) 

Seventyodd  years  ago  the  New  York  directory 
showed  the  names  of  five  hundred  and  seventy- 
one  retail  grocery  stores.  Today  there  is  left 
only  one  which  has  been  doing  business  contin- 
uously and  under  the  same  name  during  the 
seventy  years.  It  is  New  York's  oldest  grocery 
store. 

There  are  reasons  behind  this  single  success 
— the  reasons  that  underlie  all  successful  mer- 
chandising and  are  as  adaptable  to  business 
today  as  yesterday.  Finding  the  grocers  of 
New  York  reaching  out  for  trade  no  farther 
than  the  limits  of  their  own  narrow  neighbor- 
hoods, these  two  partners  decided  to  compete 
for  the  business  of  the  entire  city.  Finding 
that  poor  goods  were  constantly  being  sold  to 
customers  by  other  stores,  they  decided  that 
they  would  lose  a  customer  rather  than  work 
off  a  poor  article.  Finding,  finally,  that  other 
stores  made  no  attempt  to  give  service  beyond 
what  was  absolutely  required,  they  determined 
to  do  everything  in  their  power  to  draw  trade 
through  unusual  attention  given  to  every 
customer. 

Starting  out  as  clerks  working  in  the  store 
from  five-thirty  in  the  morning  until  ten  o'clock 
at  night,  these  young  men.  Park  and  Tilford, 
launched,  out  for  themselves  against  the  advice 
of  their  employer.  They  began  at  once  to  tell 
housewives  about  themselves,  and  quickly  won 
an  enviable  reputation  among  people  who  ap- 
preciate quality  in  goods  and  excellence  in  serv- 
ice. Today  the  name  of  their  firm,  three 
quarters  of  a  century  old,  appears  on  store 
fronts  in  all  parts  of  New  York  City. 

The  story  of  this  exceptional  firm  points  for 
you  the  "how  '  back  of  tlie  five  executive  poli- 
cies that  made  its  success,  and  which  are  es- 
sential to  every  lasting  retail  business,  and 
describes  methods  for  actually  putting  them 
into  practice. 


IX 


THE  POLICY  BEHIND  NEW 
YORK'S  OLDEST  STORE 

By  Edward  Mott  Woolley 

TWO  grocery  clerks  were  about  to  start  in  business. 
They  regretted  that  they  knew  so  little  about  the 
other  grocers  of  their  city,  New  York.  Their  friendly 
employer,  interested,  offered  this  advice : 

"Don't  trouble  yourself  about  them.  Not  more  than 
three  or  four  of  them,  right  in  your  neighborhood,  can 
possibly  be  your  competitors.  Confine  your  attention 
to  these." 

The  two  young  partners  discussed  this  advice. 

"I  wouldn't  start  in  business,"  said  one,  "if  I  really 
believed  I'd  be  so  insignificant  that  only  three  or  four 
groceries  would  consider  me  a  rival.  I'm  going  after 
every  one  of  the  five  hundred  and  seventy  in  this  city," 

This  was  over  seventy  years  ago,  in  New  York  Oity. 
Three  years  before,  this  young  man  had  come  up  from 
the  country  and  had  gone  to  work  in  Benjamin  Albro's 
store  at  268  Grand  street.  Two  years  later  the  second 
youth  became  a  clerk  in  the  same  store.  And  a  year 
later  the  two  opened  a  grocery  of  their  own  at  25  Car- 
mine street — the  five  hundred  and  seventy-first  grocery 
store  in  New  York. 

One  r  f  the  partners  had  been  storing  up  ideas  during 
his  apprenticeship.  But  working  hours  of  five-thirty  to 
ten  leave  little  time  for  outside  investigation.    Now,  in 


/ 


v. 


& 


NEW    YORK'S    OLDEST    STORE 101 

spite  of  his  old  employer's  advice,  he  began  to  study  the 
other  fellow.  For  the  next  few  months  he  spent  all  his 
spare  time  visiting  grocery  stores  in  the  guise  of  a  cus- 
tomer. 

FAILING  to  find  a  New  York  grocery  that  was  right, 
Joseph  Park  and  John  M.  Tilford  evolved  service 
principles  that  have  endured  in  their  stores. 

His  final  conclusions  he  stated  to  his  partner : 

"I  haven't  yet  found  a  store  that  does  things  right. 
In  the  first  place,  these  New  York  grocers  are  not  good 
buyers.  They  go  on  the  principle  that  they  can  work 
the  stuff  off,  even  if  they  do  get  a  lot  of  undesirable 
goods.    When  they  buy,  they  have  no  standard. 

"In  the  second  place,  they  don't  make  their  stores  at- 
tractive. The  people  must  have  groceries,  and  they  buy 
where  they  find  it  most  convenient;  but  there  isn't  a 
store  in  the  lot  that  offers  any  particular  incentive  to 
attract  customers  from  outside  its  own  little  district. 

"In  the  third  place,  they  don't  all  treat  their  custo- 
mers right;  some  misrepresent,  adulterate  goods,  make 
promises  without  any  intention  of  keeping  them.  They 
hustle  to  sell  goods,  but  they  let  their  customers  look  out 
for  their  own  interests.  They  don't  get  into  the  right 
touch  with  people." 

So  here,  at  the  start,  the  partners,  'Joseph  Park  and 
CTohn  M.  Tilford,  laid  down  the  principles  /t^ftthave 
governed  the  business  for  seventy  years.  .And  w;fh;i* 
a  year  or  two  of  that  beginning,  the  store  did  have 
among  its  competitors  a  large  number  of  groceries.  Over 
a  considerable  portion  of  New  York  the  people  had 
learned  that  this  store  was  a  desirable  place,  to  trade 
when  a  particular  quality  of  goods  was  imperative,  yr 
when  some  special  service  was  necessary.    And  row  tin's 


^v 


102      TURNING    POINTS     IN     MANAGEMENT 

store  competes  with  nearly  every  grocery  in  the  metrop- 
olis, for  the  name  of  Park  &  Tilford  is  on  not  less  than 
nine  branches. 

How  did  the  New  York  buying  public  acquire  this 
information  ? 

The  partners'  scheme  was  personal  touch.  Refusing 
to  consider  their  territory  limited  to  a  few  blocks  about 
their  store,  they  sent  men  out  to  ask  for  trade,  to  talk 
to  the  housewives.  In  this  way,  they  demonstrated 
first  that  their  store  was  more  than  a  local  institution. 
And  for  sixty-five  years  afterward,  this  was  the  way 
they  conducted  an  ever-expanding  advertising  campaign. 
This  is  the  way  they  conduct  it  today;  for,  while  they 
now  use  printer's  ink,  their  printed  advertising  is  built 
on  and  adapted  to  their  old  method  of  personal  touch. 

The  five  chief  essentials  of  acquiring  publicity  oy 
personal  touch,  as  defined  by  the  management,  are  these : 

First — Dependable  quality  of  goods  to  be  handled. 

Second — An  attractive  store,  but  not  ' '  repellently  at- 
tractive. ' ' 

Third — Reliable  men  to  come  in  contact  with  the 
firm's  customers. 

Fourth — An  adequate  and  aggressive  system  of  per- 
sonal contact. 

Fifth — Absolutely  reliable  service. 

The  methods  by  which  these  principles  have  been  car- 
"ried  out -are  here  analyzed.  And  a  policy  and  methods 
which  have  built  up  the  one  business  which  has  sur- 
vived for  seventy  years,  must  afford  ideas  and  sugges- 
tions that  every  merchant  can  apply  in  his  own  business. 

The  first  point — quality  of  goods  handled — was  one 
of  the  -most  'difficult  the  original  founders  had  to  attain. 
Having  .announced  this  essential  as  one  of  their  stand- 
ards; 'they  found  they  had  to  fight  for  it.    As  buyers, 


NEW    YORK'S    OLDEST    STORE 103 

they  quickly  got  the  reputation  of  being  cranks. 

Unable  to  sell  inferior  goods  to  this  firm,  certain  deal- 
ers saw  the  opportunity  to  build  up  a  trade  in  superior 
goods.  The  standard  was  fixed  for  them  to  reach  and 
they  began  to  match  it.  Then,  the  firm  was  no  longer  on 
the  defensive. 

Today  the  head  of  the  firm  carries  this  principle  to 
its  utmost.  He  refuses  to  handle  goods  on  experiment 
and,  having  established  brands  which  he  knows  to  be 
uniform  and  reliable,  he  is  extremely  slow  to  change. 
If  there  is  experimenting  to  be  done,  it  is  not  the  firm's 
customers  who  are  asked  to  do  it. 

RIGHT  quality  at  a  price  the  consumer  can  pay 
and  goods  that  appeal  to  different  classes — these  are 
fundamental  in  the  Park  and  Tilford  policies. 

To  uphold  such  uniformity  of  product,  a  fixed  system 
is  needed.  The  manufacturers  and  wholesalers  who  sup- 
ply the  house  are  kept  up  to  standard  by  a  system  of 
purchase  inspection  in  which  there  must  be  no  element 
of  chance. 

All  goods  are  checked  immediately  upon  their  receipt 
for  quality  and  quantity.  If  there  is  anything  about  the 
goods  that  raises  even  the  possibility  of  doubt  on  the 
part  of  the  testers  or  inspectors,  the  articles  in  question 
are  sent  to  their  respective  floors,  where  they  are  again 
carefully  examined  by  special  experts. 

All  general  lines — staple  groceries,  canned  goods,  cof- 
fees, teas,  raisins  and  every  other  food  product  except 
brands  of  prominent  manufacturers  advertised  by  brand 
name — are  mercilessly  examined,  and  must  meet  quality 
of  previous  grades  or  original  samples  submitted,  and 
must  rank  in  their  respective  grade.  If  not,  they  are  re- 
jected.   The  same  careful  examination  is  made  of  spe- 


104      TURNING    POINTS     IN     MANAGEMENT 

cialties — cigars,  for  instance. 

The  firm  realizes  that  high  quality  cannot  be  secured 
merely  by  the  request  of  the  buyer.  The  inspecting  and 
testing  system    must  supplement  the  mere  policy. 

There  is  another  element,  too,  that  enters  into  this 
matter  of  buying  high  qualities — keeping  price  down. 
The  mere  buying  of  high  quality  is  no  advantage  to  the 
merchant  unless  he  can  buy  for  the  same  price  that 
another  house  pays  for  inferior  quality.  Expertness 
and  a  knowledge  of  markets  enable  close  buying. 

The  firm  considers  its  retail  selling  price  quite  as  im- 
portant as  the  buying  price ;  to  charge  more  than  a  price 
prevailing  throughout  the  city  is  considered  an  offense 
equal  to  selling  inferior  quality — an  offense  that  oper- 
ates directly  against  the  firm's  policy. 

In  attaining  the  second  essential  to  publicity  by  per- 
sonal touch — an  attractive  store — a  long  study  in  ef- 
fects has  been  made  by  an  analysis  of  the  question : 

"What  is  the  real  definition  of  an  attractive  store?" 

This  depends  first  on  the  people  to  be  attracted.  A 
grocery  window  filled  exclusively  with  table  luxuries, 
within  the  reach  of  the  rich  only,  might  make  a  pleas- 
ing display  from  an  esthetic  standpoint,  but  it  would 
not  attract  a  general  business  to  the  interior  of  the  store. 
A  shoe  window  showing  only  patent-leather  goods  would 
scarcely  draw  the  man  who  wanted  a  pair  of  heavy 
water-proof  shoes. 

If  a  house  has  only  the  one  class  of  customers,  and 
wants  no  others,  then  window  display  becomes  sim- 
plified. But  if  it  has  various  classes,  the  question  is  one 
of  determining  what  sort  of  window  will  attract  buyers 
as  a  whole.  The  window-trimmer  must  put  himself  in 
the  mental  aspect  of  the  average  person  outside  who 
pauses  to  see  the  display.     If  this  person  is  a  rich  man, 


NEW    YORK'S    OLDEST    STORE 105 

will  he  be  impressed  with  the  fact  that  here  is  a  store 
where  he  can  procure  not  only  the  luxuries  he  desires, 
but  the  more  modest  necessities,  as  well?  If  he  be  a 
man  of  the  average,  will  he  be  frightened  away  by  the 
sumptuousness  of  the  window? 

Although  catering  to  the  high-class  trade  of  New 
York,  the  firm  looks  to  the  upper  well-to-do  class  for  a 
large  percentage  of  its  support.  It  is  apparent,  there- 
fore, that  a  really  attractive  store,  from  the  standpoint 
of  business  making,  must  not  appeal  to  one  class  to  the 
exclusion  of  the  other. 

The  same  truth  applies  to  the  interior  of  the  store.  It 
is  far  from  the  purpose  of  the  business  to  make  the 
stores  museums  of  high-priced  articles.  Experiments 
along  both  these  lines  have  demonstrated  in  dollars  and 
cents  the  drawing  power  and  repelling  power  of  interior 
store  arrangement.  A  happy  medium  has  been  found  to 
lie  in  the  blending  of  various  classes  of  goods,  so  that 
all  prospective  buyers  would  be  attracted. 

In  deciding  these  questions,  the  rule  is  adopted  to 
make  the  firm's  stores  a  reflection  of  the  truth.  The 
firm  sells  both  classes  of  trade  and  a  store,  like  a  person, 
may  carry  too  boastful  an  atmosphere. 

CLEANLINESS  in  the  store  and  care  in  the  selection 
of  the  men  who  meet  customers  have  been  essential 
factors  in  making  the  Park  and  Tilford  groceries  successful. 

Another  element  to  the  attractive  store  often  neglected 
by  grocery  houses  has  been  considered :  punctilious  clean- 
liness. Not  only  is  it  the  object  to  display  the  goods 
attractively,  but  to  handle  them  attractively.  Cheese, 
for  example,  is  cut  on  a  marble  counter,  and  is  wrapped 
in  oiled  parchment  paper,  without  being  unnecessarily 
handled.    Oiled  paper  is  placed  against  the  butter  and 


106      TURNING    POINTS    IN    MANAGEMENT 

the  cut  portion  is  turned  on  paper  and  wrapped  with- 
out coming  in  contact  with  the  hands.  Knives  are 
cleaned  constantly,  scoops  continually  burnished,  and 
other  implements  and  receptacles  kept  immaculately. 
In  the  bottle-washing  room,  after  being  cleansed,  every 
bottle  must  pass  inspection  before  a  gas  jet.  And  this 
policy  of  spectacular  cleanliness  is  made  to  include  the 
employees  who  handle  the  goods. 

This  is  really  part  of  the  third  essential — quality  in 
the  men  who  are  to  come  in  contact  with  the  firm's  cus- 
tomers. And  the  firm's  employees  are  the  medium  for 
reaching  the  fourth  essential — an  adequate  system  of 
personal  contact.  In  extending  business  through  per- 
sonal touch  with  the  public,  the  firm  looked  beyond  mere 
amiability  and  diplomatic  handling  of  people.  The  sys- 
tem was  also  aggressive,  creative,  business-building. 

Today  the  firm's  personal-touch  business  getters  are 
of  two  classes — solicitors  of  new  customers,  and  solicitors 
of  the  daily  order  from  existing  customers. 

Between  seven-thirty  and  eight  o'clock  every  week- 
day morning,  this  quiet  but  aggressive  power  is  set  at 
work  among  the  homes  of  New  York. 

This  staff  penetrates  to  the  kitchens  of  the  metropolis. 
Today  the  most  exclusive  homes  open  to  them.  But  this 
end  has  not  been  easily  achieved.  If  the  aggregate  his- 
tory could  be  written  of  the  seventy  years  of  battling 
for  business  by  this  laborious  personal  touch,  the  sum 
total  of  discouragement  and  rebuff  would  be  enormous. 

The  solicitors  of  new  trade  are  an  organization  by 
themselves,  devoting  all  their  time  to  this  work,  while 
the  other  class  of  solicitors — the  order-takers  who  visit 
customers  already  secured — are  called  upon  at  times  in 
the  double  capacity  of  taking  orders  and  canvassing 
neighborhoods  for  new  customers. 


NEW    YORK'S    OLDEST    STORE 


107 


108      TURNING    POINTS    IN    MANAGEMENT 

Solicitors  do  not  carry  samples,  but  take  out  the  gen- 
eral catalog  as  a  guide  and  argument.  In  this  catalog 
a  system  of  grouping  is  followed  that  begins  the  list  with 
things  used  for  breakfast  and  ends  it  with  desserts.  The 
reader  goes  through  the  articles  in  logical  sequence,  with- 
out a  confusion  of  products.  An  index  also  supplements 
this  arrangement.  As  fast  as  the  solicitors  turn  in  the 
names  of  prospects  and  customers,  catalogs  are  mailed 
to  them.  New  accounts  are  very  closely  followed  up, 
both  by  correspondence  and  personal  calls;  the  idea 
is  to  develop  the  legitimate  purchasing  ability  of  each 
customer  to  its  maximum. 

In  the  selection  of  solicitors  the  greatest  care  is  main- 
tained. They  are  classed  as  salesmen,  subject  to  all  the 
requirements  of  a  difficult  art.  They  are  required  to 
know  the  firm's  goods  as  accurately  as  a  road  salesman 
should  know  his  line.  Any  misstatement  is  an  unpardon- 
able offense,  and  in  conflict  with  basic  policy. 

But  this  securing  of  business  by  personal  touch  is  only 
the  beginning  of  the  firm's  system  of  extending  pub- 
licity by  its  intimate  and  satisfying  contact  with  cus- 
tomers. Having  obtained  the  order  or  secured  the  new 
customer,  the  next  step  is  to  fill  the  order — fulfil  the 
promise  on  which  it  was  gained. 

The  firm  has  always  felt  that  this  is  the  most  im- 
portant function  of  a  business.  Many  houses  neglect  it ; 
often  extraordinary  laxity  is  manifested. 

The  purpose  has  been  to  give  the  delivery  system  the 
rigidity  and  elaborateness  of  a  railway  train  schedule — 
and  it  is  probably  better  lived  up  to. 

This  delivery  system  handles  daily  an  average  of 
about  25,000  separate  orders  in  New  York,  not  including 
the  extensive  mail-order  business.  The  Seventy-second 
Street  store  has  made  deliveries  in  one  day  of  3,500 


NEW    YORK'S    OLDEST    STORE 109 

orders.  Each  store  maintains  its  own  delivery  organi- 
zation, with  its  exact  routes  and  time-tables.  How  pre- 
cisely these  routes  are  laid  down  is  shown  by  the  fol- 
lowing schedule  of  a  wagon  operating  in  Brooklyn  and 
Greenpoint : 

"Beginning  at  Houston  Street  ferry,  Grand  Street  to 
51  Broadway,  to  Kent  Avenue  and  Eighth  Street,  Wilson 
Street,  Penn  Street,  Flushing  Avenue,  to  750  Park  Ave- 
nue, to  708  Green  Avenue,  to  567  Putnam  Avenue,  to 
202  McDonough  Street-  Turn  to  1719  Fulton  Street,  to 
465  Halsey  Street,  from  502  to  836  Hancock  Street,  517 
to  850  Madison  Street,  703  to  854  Gates  Avenue,  780  to 
980  Lafayette  Avenue,  449  to  1089  Broadway,  to  543 
Grant  Street,  to  50  Brunswich  Avenue,  to  200  Graham 
Avenue,  from  215  to  500  Driggs  Avenue,  to  980  Lorimer 
Street,  to  835  Manhatten  Avenue,  from  1  to  250  Green- 
point  Avenue,  Java  Street,  Eagle  Street,  to  Greenpoint 
Avenue,  to  Twenty-third  Street  ferry. 

This  one  wagon  repeats  this  trip  continually.  At  any 
given  point  on  the  route  the  housekeeper,  when  she 
learns  the  schedule,  need  not  trouble  herself  with  fret- 
ful watchings. 

"A  trained  and  pleasant-mannered  solicitor  is  a  defi- 
nite force  in  securing  the  right  sort  of  publicity,"  said 
an  executive  of  the  house.  "But  the  cheery  voice  of  the 
delivery  man,  as  he  deposits  bundles  on  the  kitchen 
table  at  the  time  prescribed,  is  far  more  potent." 

Working  on  these  principles,  the  business  grew  rap- 
idly, not  as  a  department  store  grows,  but  by  closer, 
more  intimate  personal  touch  with  the  people.  The  pol- 
icy was  the  reverse  of  that  of  a  department  store — the 
reverse  of  concentration. 

From  the  beginning  the  firm  went  to  the  people, 
sought  them  out  in  person  and  wove  its  business  among 
them.  In  1847  the  business  had  outgrown  its  original 
quarters,  and  a  larger  establishment  was  opened  at  Ninth 
street  and  Sixth  avenue.       Here  the  headquarters  re- 


110      TURNING    POINTS    IN    MANAGEMENT 

mained  for  more  than  ten  years,  when  the  first  Broad- 
way store  was  established.  Between  that  time  and  this, 
new  stores  have  been  opened  to  keep  pace  with  the  north- 
ward growth  of  New  York. 

The  well-knit  and  effective  organization  of  the  house — 
as  shown  on  the  chart — has  been  a  factor  in  its  success. 
But  only  as  it  has  carried  out  its  policies.  And  so  of 
the  greatest  significance  to  every  merchant  and  worthy 
of  study  are  the  five  factors  that  have  made  this  success, 
because  they  are  absolutely  known  to  be  the  causes  of 
the  growth  of  this  business.  No  printer's  ink  advertis- 
ing was  done  until  five  years  ago.  Not  that  this  dis- 
parages advertising.  For  as  a  store  official  said,  "Our 
success  would  doubtless  have  been  much  greater  and 
earlier  had  we  advertised  all  along." 

And  yet  these  retailers  have  always  advertised;  they 
have  kept  in  touch  with  the  public.  They  have  carried 
quality  goods  and  given  good  service — and  have  told  the 
buying  public  about  them.  They  have  gone  out  looking 
for  the  buyer  and  forced  this  story  on  him — they  have 
made  good  on  this  service. 

That  is  advertising.  And  it  is  just  as  ready  for  you 
and  usable  by  you,  no  matter  what  or  where  you  sell 
as  the  columns  of  your  local  paper. 

1JTUMAN  beings  are  not  like  merchandise,  nor  are  they  to 
■*•  be  handled  as  merchandise.  Dealing  vrith  the  purchas- 
ing public  is  a  problem  in  personality,  and  it  is  through  the 
point  of  contact,  wherever  it  may  be,  at  the  counter,  through 
correspondence  or  whatever  the  service  rendered,  that  the 
favorable  impressions  are  created  which  ultimately  consti- 
tute one  of  the  firm's  greatest  assets. 

— Henry  C.  Lytton 

President,  The  Hub,  Chicago 


SELFRIDGE'S,  THE  STORE 
THAT  STARTED  BIG 

(described  in  chapter  x) 

"Begin  small;  grow  big — slowly,"  is  a  jore- 
most  precept  of  business. 

But  there  was  started  in  London  a  business 
that  began  big;  a  business  which  on  its  first 
day  of  operation  occupied  a  specially  construc- 
ted building  of  five  stories  with  six  acres  of 
floor  space;  with  a  thousand  employees  behind 
its  counters,  at  its  desks,  in  its  warerooms; 
with  two  million  dollars'  worth  of  goods  on  its 
shelves  ready  for  buyers;  with  a  policy  and 
plan  of  organization  definitely  laid  out  Jor  it. 
A  thousand  details  had  to  be  looked  after  and 
locused  on  that  one  opening  day. 

Service  was  the  policy  back  of  this  enter- 
prise and  foremost  in  the  mind  of  its  founder, 
H.  Gordon  Selfridge.  To  the  English  public 
his  idea  was  revolutionary  and  in  marked  con- 
trast to  the  policies  prevalent  in  other  English 
stores.  At  first  it  was  hard  for  Londoners  to 
believe  that  he  practised  all  he  claimed,  but  his 
insistence  on  the  word  "service"  has  after  sever- 
al years  won  the  hearty  support  of  the  public, 
and  now  other  stores  are  following  in  his  lead. 
His  business  is  probably  growing  at  a  faster 
pace  than  any  other  big  London  store,  and  is 
producing  deserved  profits  for  the  founder. 

"Selfridge' s,  London"  was  a  unique  venture; 
an  organization  intended  not  only  to  achieve 
greatness,  but  to  be  born  great.  To  be  put  into 
effect  at  all,  the  idea  required  a  most  careful 
plan.  How  this  plan  was  worked  out  success- 
fully, how  the  doors  of  this  great  store  came  to 
be  thrown  open  on  the  appointed  day  to  the 
waiting  public,  is  told  in  this  chapter,  partly 
in  the  words  of  Mr.  Selfridge  himself. 


X 


BUILDING  A  BUSINESS 
TO  ORDER 

From  an  Interview  Given  by  H.  Gordon  Selfridge, 
Managing  Director,  Selfridge  and  Company 

IN  a  small  suite  of  offices  on  Oxford  street,  in  London, 
a  business  builder  planned  for  two  years.  Planned 
the  opening  of  a  retail  store  which  should  stand  among 
the  world's  greatest  on  the  first  day  of  its  existence — 
working  out,  one  by  one,  the  problems  and  details  of  its 
organization  and  policy :  that  was  H.  Gordon  Selfridge 's 
two  years'  work.  And  these  plans  culminated  in  the 
opening  of  Selfridge  and  Company,  London,  to  London's 
buying  public. 

The  experience  in  business  and  retailing  on  which 
basis  Mr.  Selfridge  planned  is  the  first  stage  in  this 
story  of  a  business  built  to  order.  Over  twenty-five 
years  ago  Mr.  Selfridge  came  from  a  country  village 
to  Chicago.  He  started  working  in  a  retail  store  as  an 
office  boy.  Ten  years  later  he  was  manager  of  the  store ; 
and  ten  years  after  that  he  was  managing  partner  of 
the  world's  greatest  retail  institution — the  house  of 
Marshall  Field  and  Company. 

This  was  the  basis  of  experience  behind  Mr.  Selfridge 
when  he  determined  to  open  a  great  retail  store  in  Lon- 
don. The  initial  step  was  to  determine  the  policy  of  the 
store.  First  and  foremost  it  is  to  be  emphasized  that  the 
Selfridge  store  is  an  English  store,  designed  to  appeal  to 
the  English  public,  manned  by  an  English  staff.     It  is 


STARTING    A    BUSINESS    BIG 113 

not  an  American  dry  goods  store  set  up  in  London. 

Mr.  Selfridge  has  never  been  a  narrow  retailer.  He 
had  bought  and  sold  products  from  all  corners  of  the 
entire  world ;  he  had  bought  from  people  of  all  national- 
ities; he  had  sold  to  people  of  all  classes.  So  first  he 
studied  the  conditions  of  the  field  he  was  to  enter;  the 
market  and,  most  important  of  all,  the  national  char- 
acteristics of  his  prospective  clientele.  Every  city  has 
its  different  business  customers,  its  own  type  of  buying 
public.  By  observation,  by  study,  the  merchant  must 
grow  to  know  what  the  public  with  which  he  is  con- 
cerned likes  in  his  line;  what  they  might  prefer,  what 
they  have  been  accustomed  to ;  he  must  grow,  in  a  word, 
to  be  one  of  the  public  himself. 

SECURING  the  confidence  and  friendship  of  the  buying 
public  is  a  cornerstone  in  the  Selfridge  policy  which 
has  started  a  retail  business  big. 

What  perhaps  is  the  prime  principle  of  his  policy, 
Mr.  Selfridge  expresses  this  way :  ' '  Get  the  confidence 
of  the  public  and  you  will  have  no  difficulty  in  getting 
their  patronage.  Inspire  your  whole  force  with  the 
right  spirit  of  service ;  encourage  every  sign  of  the  true 
spirit.  So  display  and  advertise  wares  that  customers 
shall  buy  with  understanding.  Treat  them  as  guests 
when  they  come  and  when  they  go,  whether  or  not  they 
buy.  Give  them  all  that  can  be  given  fairly  on  the  prin- 
ciple that  to  him  that  giveth  shall  be  given.  Remember 
always  that  the  recollection  of  quality  remains  long  after 
the  price  is  forgotten.  Then  your  business  will  prosper 
by  a  natural  process." 

"When  I  was  a  boy,  and  newly  entered  to  my  firm,  I 
was  told  to  make  out  a  bill  against  a  railroad  company 
for  some  sheeting  damaged  in  transit.    A  few  days  later 


114      TURNING    POINTS     IN     MANAGEMENT 

my  chief  sent  for  me  and  brought  the  matter  up. 

"  'Young  man,'  he  said,  'you  have  done  something  I 
want  you  never  to  do  again.  The  bill  you  made  out 
should  have  been  for  the  cost  of  the  sheeting  to  us ;  not 
for  our  selling  price.' 

"The  small  difference  never  would  have  been  discov- 
ered by  the  railroad  company,  and  many  merchants 
would  have  considered  it  legitimate,  for  it  would  hardly 
cover  our  expense  in  insuring  and  handling.  But  I  have 
never  forgotten  the  justice  of  my  old  chief's  reprimand, 
and  the  wisdom  of  his  words. ' ' 

Because  of  his  anxiety  to  serve  his  clientele  in  the 
light  of  his  twenty-five  years'  experience  in  the  possi- 
bilities of  retail  development,  many  innovations  unknown 
to  the  British  shopper  mark  the  Selfridge  service. 

English  stores  were  usually  from  first  to  last,  "sales- 
rooms. ' '  No  individual  was  welcome  there  unless  he  or 
she  had  something  to  spend  and  wanted  to  spend  it. 
They  were  closed  houses  to  the  general  public,  and  to 
return  a  purchase  to  one  of  these  stores  was  to  court 
trouble  unless  you  had  some  specially  good  reason  to 
offer. 

On  these  two  points,  at  least,  Mr.  Selfridge 's  service 
is  different.  "The  open  door"  is  the  first  principle. 
"Money  back  without  question"  is  another.  Points  of 
this  kind  distinguished  his  store  service  over  the  retail- 
ing methods  to  which  he  first  offered  competition. 

A  beautiful  home,  an  efficient  staff,  a  perfect  stock, 
will  not  win  dividends  if  the  confidence  of  the  public  is 
not  obtained.  Mr.  Selfridge  holds  that  the  most  expen- 
sive and  destructive  thing  a  merchant  can  do  is  to  fool 
the  public  or  even  give  the  buyer  the  impression  that 
he  is  being  mistreated.  He  quotes  this  saying  of  the 
Indians:     "If  white  man  fool  Indian  once,  shame  on 


STARTING    A    BUSINESS    BIG 


115 


MB.  SELFRIOGC 


ADMINIS- 
TRATION 


FIGURE  X:      On  the  opening  day  this  business  was  completely  organ- 
ized.    The  chart  shows  how  Mr.  Selfridge  keeps  in  direct  touch  with  his 
organization  through  the  seven  administrative  officers 


116      TURNING    POINTS     IN     MANAGEMENT 

white  man.  If  he  fool  Indian  twice,  shame  on  Indian." 
The  policy  determined,  the  next  step  was  to  build  a 
home  for  the  business.  And  here,  too,  aside  from  the 
modern  type  of  construction  and  the  speed  records 
broken  in  building,  the  constant  end  in  view  was  service 
to  the  customer.  Here  is  a  building  which  covers  nearly 
the  entire  area  of  a  city  block,  facing  on  three  streets. 
Its  five  stories  rise  to  the  limit  of  height  allowed  by  the 
London  County  Council.  Down  three  more  stories  it 
extends  to  a  lofty  basement  under  the  whole  building; 
to  a  second  basement  for  warehousing  under  half  the 
area ;  and  to  the  power  plant  and  machinery  rooms  still 
lower  in  the  third  basement. 

The  plans  once  determined  and  the  ground  leases  of 
the  site  secured,  the  work  of  construction  was  done  in 
record  time.  In  a  little  less  than  a  year  the  building 
was  ready  for  occupancy. 

EFFECTIVE  organization  has  made  possible  the  de- 
velopment of  "the   Selfridge   idea"    into    the   great 
London  concern  which  it  has  now  succeeded  in  becoming. 

In  the  meantime  the  plan  of  organization  was  being 
determined  and  its  personnel  gathered.  The  first  step 
was  departmentalization. 

On  the  wall  of  Mr.  Selfridge 's  office  hangs  a  chart. 
It  resembles  the  pedigree  of  a  gigantic  family.  It  is 
labelled  "Chart  of  Organization."  Mr.  Selfridge  says: 
"It  stands  for  system.  It  represents  a  big  retail  em- 
porium scientized — a  word  as  yet  in  no  dictionary." 

At  the  head  of  the  organization  is  Mr.  Selfridge,  the 
managing  director.  Under  him  the  business  is  divided 
into  seven  departments  with  seven  managers — manager 
of  merchandising,  manager  of  the  accounting  staff,  man- 
ager of  the  selling  staff,  manager  of  expense,  manager  of 


STARTING    A    BUSINESS    BIG 117 

mail  orders,  manager  of  systems,  manager  of  building 
and  equipment.  The  endeavor  in  this  organization  chart 
is  to  make  system  play  its  vital  part  in  the  management 
of  the  entire  business;  to  miss  the  placing  of  no  detail; 
to  leave  nothing  just  to  happen,  and  to  concentrate  all 
responsibility. 

From  these  seven  department  managers  descend  the 
various  sub-departments  with  their  heads  and  their  as- 
sistants, to  the  lowest  rank.  The  accompanying  chart 
shows  how  the  various  activities  and  the  minutest  de- 
tails of  the  business  group  themselves  under  the  proper 
heads.  Departmental  responsibility  is  absolute.  Every 
detail  in  each  of  the  seven  departments  is  handled  ex- 
clusively through  the  manager  in  charge.  Any  sugges- 
tions or  instructions  relating  to  any  of  these  departments 
that  may  emanate  from  Mr.  Selfridge  are  given  to  the 
manager  of  the  department.  In  this  way  each  head  is 
made  to  feel  his  responsibility  for  his  work. 

And  in  planning  this  organization  Mr.  Selfridge  has 
placed  "men"  first.  He  has  spent  more  time  and 
thought  on  getting  the  right  men  for  the  right  jobs 
than  on  any  other  detail  of  his  business. 

"The  most  difficult  branch  of  the  art  of  selecting 
men,"  he  says,  "is  to  find  a  man  for  a  new  position. 
Chance  sometimes  helps  here — as  when  I  first  hit  upon 
the  idea  of  having  a  manager  of  expense  and  was  seek- 
ing my  pioneer  economist.  One  day,  passing  through  a 
workroom,  my  eye  lit  upon  a  home-made  set  of  pigeon- 
holes. It  transpired  that  one  of  the  assistants,  who  was 
responsible  for  selling  clippings  of  cloth  to  the  ragman, 
had  devised  the  pigeon-holes  as  a  means  of  sorting  clip- 
pings according  to  their  values — in  order  to  gain  higher 
prices.  The  idea  was  his  own,  and  had  been  carried  out 
on  his  own  initiative. 


118      TURNING    POINTS    IN     MANAGEMENT 

"From  the  moment  that  I  discovered  this,  the  new 
post  of  manager  of  expense  was  filled.  Economies  began 
forthwith.  Dropped  pins  were  picked  up,  and  in  one 
department  alone  this  resulted  in  a  monthly  saving  of 
seventy  shillings.  String  was  no  longer  wasted  in  the 
wrapping  department,  and  the  monthly  string  bill  was 
reduced  by  half.  In  three  months  the  manager  of  ex- 
pense saved  the  firm  hundreds  of  pounds. ' ' 

Buying  the  merchandise  was  a  simple  problem.  The 
policy  of  the  store  determined  and  the  personnel  of  the 
organization  gathered  together,  it  became  simply  a  mat- 
ter of  the  same  routine  that  a  retail  buyer  goes  through 
every  day,  except  that  every  department  man  had  at 
this  one  time  to  purchase  every  line  and  every  article 
in  his  stock,  and  he  had  to  see  that  they  were  delivered 
at  approximately  the  same  time.  The  advertising  cam- 
paign hinged  upon  the  day-to-day  developments. 

"The  culminating  point  in  the  planning  of  this  huge 
organization,"  said  Mr.  Self  ridge,  "was  the  time  when 
the  doors  were  thrown  open  to  the  public — when  life  was 
breathed  into  the  dormant  organization — when  the  pub- 
lic was  invited  to  enter  into  possession  of  the  building 
that  had  been  erected  for  its  benefit.  We  wanted  the 
public  to  realize  that  this  magnificent  building  is 
theirs — not  the  merchandise,  of  course,  though  that  can 
be  theirs  by  purchase — but  the  facilities  and  the  service 
it  represents.    That  was  the  climax  of  the  great  game.,, 

$> 

^HE  leader  who  can  imbue  an  army  of  workers  with  a 
■*■  spirit  of  earnest  fidelity  to  duty,  an  unanswering  desire 
to  do  the  necessary  thing,  and  to  do  it  always  with  animation, 
kindness,  courtesy  and  good  cheer,  is  entitled  to  rank  with  the 
large  men  of  earth. 

— James  Logan 

Chairman,  Executive  Board,  United  States  Envelope  Company 


ZALMON  G.  SIMMONS 

(contributor  op  CHAPTER  XI, 
"sixty  years  in  the  market  place.") 

First  as  a  merchant,  Mr.  Simmons  showed 
thai  determination  and  clean  enthusiasm,  backed 
by  ability,  count  heavily  for  success.  With 
fourteen  months'  training  and  two  hundred  dol- 
lars in  cash,  he  bought  a  fourteen  thousand  dol- 
lar store  on  credit  and  paid  for  it  from  the 
profits. 

Then  he  carried  his  high  standards  and 
"never  say  die"  resolution  into  other  activities. 
Be  rescued  from  hopeless  bankruptcy  the  rail- 
road to  which  the  fortunes  of  his  town  were 
bound;  he  covered  the  Northwest  with  a  web 
of  telegraph  wires — twenty  thousand  miles  in 
all — developing  a  four  million  dollar  property 
from  an  investment  of  five  hundred  dollars. 
For  thirty-eight  years  he  was  a  bank  president. 
And  he  built — a  business  man's  daring  flight 
into  the  spectacular — the  remarkable  cog  rail- 
way up  Pike's  Peak.  Last  of  all,  he  founded 
a  prosperous  manufacturing  firm. 

His  flash  of  inspiration,  given  life  by  his  de- 
termination, in  1856,  first  fused  the  railroad 
and  the  telegraph  and  opened,  to  both  the  way 
to  their  present  tremendous  expansion.  The 
telegraph  had  been  invented  two  decades,  but 
was  still  generally  unprofitable.  He  made  it 
pay,  and  transportation,  trade  and  industry 
began  a  new  epoch  in  America. 

In  his  chapter,  Mr.  Simmons  points  the  why 
back  of  his  success,  and  in  the  telling  not  only 
weaves  a  remarkable  story  of  the  country's  de- 
velopment, but,  perhaps  unconsciously,  shows 
you  the  dependency  of  success  in  management 
on  the  intangible  qualities  of  strong  determina- 
tion and  enthusiastic  resolution.  As  a  boy 
Simmons  was  sent  to  collect  a  bill.  The  debtor 
offered  him  a  valuable,  but  untamed,  cow  in 
payment,  on  condition  that  it  be  taken  into 
market.  The  future  manager  of  millions  drove 
thai  cow,  which  the  debtor  thought  he  could  not 
master,  about  a  field  until  it  was  too  exhausted 
to  break  for  its  shed — it  took  hours,  far  on  into 
the  night — yet  the  beast  did  go  to  market. 
So  steady,  purposeful  resolution  was  constantly 
woven  into  all  his  plans  as  a  business  builder. 


XI 

SIXTY  YEARS  IN  THE 
MARKET  PLACE 

By  Zalmon  O.  Simmons 
Founder,  Simmons  Manufacturing  Company 

LUCK  has  been  a  partner  in  my  enterprises,  friends 
have  often  told  me.  Casting  back  over  my  sixty 
years  in  business,  it  is  not  hard  to  understand  their  con- 
clusion. Opportunity  has  beckoned  me  into  several 
fields  not  very  closely  related ;  despite  the  general  belief 
that  a  merchant  or  manufacturer  does  well  to  stick  to 
his  special  activity,  a  measure  of  success  has  attended 
me  in  each.  My  own  idea  is  that  this  luck  has  really 
been  persistence,  coupled  with  a  fairly  active  mind  and 
a  habit  of  analysis.  Whatever  struck  me  as  offering 
a  chance,  I  looked  into  carefully.  Whatever  I  under- 
took, I  carried  to  completion. 

Business  appealed  to  me  early.  As  a  boy  and  young 
man  I  farmed  and  taught  school  in  pioneer  Wisconsin — 
my  time  and  labor,  as  was  then  the  custom,  belonging 
to  my  father  during  my  minority.  The  very  day  I  came 
of  age,  however,  I  went  to  work  as  clerk  in  a  Kenosha 
store  and  began  to  study  buying  and  selling  as  other 
young  fellows  read  law  or  medicine. 

Seth  Doane  was  my  first  and  only  employer.  We  had 
talked  over  my  desire  to  get  into  business  several  times 
and  he  had  promised  to  give  me  a  job  when  I  was  my 
own  man.  Naturally,  wages  had  not  been  mentioned. 
And  when  I  claimed  a  place  on  my  twenty-first  birth- 


SIXTY    YEARS    A    MANAGER 121 

day  and  asked  two  hundred  dollars  a  year,  Mr.  Doane 
expressed  surprise. 

"See  that  clerk  in  there?"  We  were  on  the  front 
porch;  he  pointed  to  a  young  man  arranging  stock  in- 
side. "I  pay  him  twelve  dollars  a  month,  and  he's  a 
good  clerk.     How  does  that  strike  you?" 

1 '  I  guess  you  pay  him  what  he  is  worth, ' '  I  answered. 
I  wanted  to  work  for  Mr.  Doane,  but  I  felt  that  I  could 
earn  two  hundred  dollars  a  year  and  I  stood  out  for 
that  figure.  My  tenacity  won  a  conditional  victory.  Mr. 
Doane  agreed  to  put  off  the  question  of  pay  for  three 
months.  If  I  could  show  that  I  was  worth  two  hundred 
dollars  a  year  I  was  to  get  it. 

I  got  it  and  I  believe  I  earned  it.  Eight  months  after 
I  entered  his  employ,  Mr.  Doane  fell  ill  and  unloaded 
practically  all  his  duties  on  me.  For  six  months  I  was 
his  manager,  running  the  business,  reporting  to  him 
daily,  having  his  advice  on  every  knotty  point,  checking 
up  my  own  ideas  on  buying,  selling  and  the  like  against 
his  experience. 

WITH  a  capital  of  only  two  hundred  dollars,  Mr. 
Simmons  made  his  first  personal  venture — principles 
of  service  and  merchandising  that  made  him  successful. 

Then,  believing  that  he  could  not  recover,  he  offered 
to  sell  me  the  store.  It  was  worth  the  fourteen  thou- 
sand dollars  he  asked :  while  my  savings  were  exactly  two 
hundred  dollars.  Mr.  Doane  proposed  to  take  my 
notes  for  the  purchase  price,  with  interest  at  twelve  per 
cent.  It  was  an  unusual  chance,  a  short  cut  to  an  estab- 
lished business,  but  the  risk  was  enormous.  Had  I 
learned  enough,  in  my  brief  period  of  training,  to  con- 
duct such  a  big  store,  with  virtually  no  capital  to  safe- 
guard me  against  mistakes  and  with  heavy  payments  due 


122      TURNING    POINTS     IN    MANAGEMENT 

yearly  on  interest  and  principal?  Balancing  the  oppor- 
tunity against  the  danger,  I  decided  that  I  could  handle 
the  thing  and  signed  the  notes. 

When  I  began  selling  dry  goods  and  groceries  in  Ken- 
osha, the  code  of  the  horse  trader  extended  to  all  sorts  of 
transactions.  The  general  attitude  was  indicated  by  the 
phrase  so  often  applied  to  the  successful  individual — 
"a  shrewd  business  man."  If  he  could  keep  clear  of 
legal  tangles,  the  morality  of  his  actions  was  not  seri- 
ously questioned.  There  were  many  and  shining  excep- 
tions, of  course ;  men  in  every  community  whose  integrity 
was  invincible  and  whose  example  helped  to  put  trading 
on  a  higher  plane.  Men,  too,  like  Cyrus  McCormick, 
whose  faith  in  their  fellows  was  to  be  expressed  in 
credits  running  into  millions  of  dollars  to  obscure  buyers 
of  reapers.  They  demonstrated  to  every  one  the  cash 
value  of  a  good  name,  and  by  vigorous  collections  the 
difficulty  of  escaping  settlements. 

I  discovered,  during  my  first  year  with  Mr.  Doane, 
that  collections  presented  one  of  the  dealer's  most  serious 
problems.  It  was  easy  to  sell  seasonable  goods  if  you 
were  willing  to  extend  credit;  it  was  hard  to  draw  the 
line  between  the  honest  man  whose  lack  of  prudence 
and  foresight  would  lead  him  to  buy  more  than  he 
could  pay  for  and  the  morally  irresponsible  who  would 
carry  off  everything  he  could  secure  on  any  terms  but 
cash.  The  first  man  simply  needed  help  in  wise  buying 
and  opportune  paying :  the  other  man  was  a  plague  even 
when  he  paid  cash.  Exhausting  his  harvest  money  in  a 
few  weeks,  he  went  around  abusing  the  storekeeper 
"who  took  his  money  when  he  had  it,  but  let  him  starve 
when  he  was  strapped. ' ' 

One  of  the  Kenosha  hotelkeepers  belonged  to  the 
honest  optimist  class.    Mr.  Doane  in  going  over  his  books 


SIXTY    YEARS    A    MANAGER 123 

drew  my  attention  to  this  man's  account  and  asked  me 
to  try  to  collect  it.  The  amount  was  nearly  two  hundred 
dollars.  Mr.  Doane  had  exhausted  his  own  resources 
without  securing  any  result. 

I  made  out  a  bill  and  called  on  Mr.  R the  next 

morning,  when  he  was  sure  to  be  disengaged.  He  greeted 
me  affably,  and  was  not  a  bit  taken  aback  when  I  pre- 
sented my  memorandum  of  the  debt. 

"That's  all  right,  Mr.  Simmons,"  he  declared,  "Tell 
Mr.  Doane  I'm  going  to  pay  him  just  as  soon  as  I  get 
the  money." 

"Mr.  Doane  knows  that,"  I  assured  him.  I  had  de- 
cided that  only  untiring  patience  would  serve  my  pur- 
pose. "He  doesn't  want  you  to  pay  one  cent  before 
you're  able  and  ready  to  settle.  But  he  has  turned  this 
part  of  the  business  over  to  me  and  I  want  you  to  let  me 
come  up  to  see  you  now  and  then.  Not  to  hurry  you, 
understand;  just  to  be  on  the  spot  when  you  want  to 
pay  something  on  the  account." 

R laughed. 

"Come  as  often  as  you  like,"  he  said.  "I'll  be  glad 
to  see  you." 

That  permission  was  my  first  object.  Next  day  I  re- 
turned; again  the  second  day;  and  then  daily  for  a 
couple  of  weeks,  I  stopped  in  at  the  hotel  and  had  a  little 
chat  with  my  delinquent.  I  tried  to  be  agreeable  and 
made  no  mention  of  the  bill  except  just  as  I  was  leaving 
each  time.  This  amused  my  man  at  first,  but  the  hotel 
was  something  of  a  lounging  place  and  folk  began  to 
notice  the  regularity  of  my  calls — probably  commented 

on  them.    Finally  R lost  his  urbanity  and  asked 

me  point  blank  what  I  meant  and  how  long  I  intended 
to  call  on  him. 

This,  too,  I  had  counted  on.     I  reminded  him  of  his 


134      TURNING    POINTS     IN     MANAGEMENT 

invitation  and  told  him  that  I  would  continue  to  present 
myself  every  day  until  he  paid  up.  I  was  deferential 
but  firm.  He  had  no  excuse  for  anger:  but  then  and 
thereafter  it  was  evident  that  my  visits  wore  on  his 
nerves. 

The  comedy  lasted  about  two  months.  He  brought 
things  to  a  focus  one  day  by  asking :  ' '  You  're  going  to 
keep  on  coming  here  until  I  pay  that  bill  ? ' ' 

I  answered  yes. 

"How  long  do  you  expect  to  live?" 

I  had  fair  expectations  of  life,  I  explained.  At  least 
I  hoped  to  live  long  enough  to  find  him  with  some  money 
he  could  spare. 

He  frowned,  but  surrendered.  He  paid  me  ten  dollars 
and  I  credited  it  on  the  bill.  Next  day  I  returned.  He 
didn't  relish  my  appearance  so  soon,  but  I  was  friendly 
and  he  contained  himself.  Within  a  week  he  made  a  sec- 
ond payment :  then  as  rapidly  as  he  could  get  the  money 
he  cleared  off  the  debt.  That  was  my  first  organized 
"follow-up."  Its  outcome  confirmed  my  faith  in  per- 
sistence and  good  temper  as  the  readiest  weapons  in  the 
business  armory. 

LOOKING  back  over  a  stormy  period  in  American 
business  history,  Mr.  Simmons  concludes  that  op- 
timism is  the  only  possible  outlook  for  the  future. 

Optimism  is  the  only  outlook  possible  to  a  man  who 
has  spent  sixty  years  in  American  business.  Our  re- 
markable development  in  transportation,  trade  and  in- 
dustry has  been  accomplished  in  spite  of  real  difficulties. 
It  is  significant — and  prophetic,  I  think,  of  yet  greater 
advances — that  this  development  has  been  attended  by 
revolutionary  betterments  in  methods  and  processes,  by 
remarkable   economies  in  materials,  labor,  energy  and 


SIXTY    YEARS    A    MANAGER 125 

capital.  Likewise,  that  no  emergency  or  disaster  has 
found  the  business  men  of  the  whole  country  or  of  any 
community  unable  to  cope  with  it ;  unable  to  improvise  a 
remedy  and  in  time  work  out  a  permanent  cure. 

We  have  made  mistakes,  it  is  true.  We  have  moved 
too  fast  at  times.  We  have  had  many  men  who  brok? 
into  new  fields  and  lost  their  bearings,  so  far  as  safety 
for  their  ventures  or  justice  to  their  fellows  were  con- 
cerned. We  have  had  panics  and  periods  of  depression. 
But  I  have  learned,  from  observation  and  experience, 
that  panics  are  not  unmixed  evils.  From  each  of  them 
we  learn  something  that  helps  us  to  carry  on  our  affairs 
more  cheaply  or  more  securely  in  the  years  that  follow. 
The  price  is  high,  but  the  knowledge  is  worth  buying; 
we  learn  more  in  a  year  of  restricted  sales  and  profits 
about  the  essentials  of  our  undertakings  than  twenty 
prosperous  years  would  teach  us. 

The  man,  the  house  or  the  community  that  has  weath- 
ered one  panic  works  on  a  safer  basis  ever  afterwards. 
In  fact,  I  am  not  sure  that  we  do  not  need  occasional 
panics  to  test  the  fabric  of  our  trade  and  industry  and 
apply  brakes  at  intervals  to  our  initiative  and  energy. 
American  men  are  producers — men  of  action.  They 
begin  earlier  than  the  men  of  any  other  nation;  they 
work  harder  and  faster:  they  hang  on  longer  and  by 
force  of  courage  and  energy  they  get  results.  Their 
fault  is  ambition — the  desire  to  grow — impatience  with 
the  thing  they  have  accomplished.  They  want  expansion 
— greater  volume.  They  are  bound  to  get  it,  too.  They 
are  fortunate  if  a  period  of  stringency  comes  along 
before  they  have  outgrown  their  capital,  the  ability  of 
their  organizations  or  their  natural  markets,  to  enforce 
the  lesson  of  safe  building  and  balance  in  their  ventures. 

American  business  has  never  failed  to  adapt  itself  to 


126      TURNING    POINTS     IN     MANAGEMENT 

conditions  and  even  generate  new  power  from  handicaps. 
Take  our  currency,  for  example.  In  my  store-keeping 
days  even  a  cash  business  was  attended  by  annoyance  and 
serious  risks. 

Every  one  seems  agreed  that  our  present  currency 
system  needs  reforming.  Comparing  present  conditions, 
however,  with  those  I  recall  in  "wild  cut"  and  ''stump 
tail"  times  and  in  the  chaotic  era  which  preceded  them, 
the  disadvantages  under  which  trade  labored  then  seem 
appalling.  When  you  have  to  exchange  commodities  for 
bank  notes  or  scrip  which  may  suffer  a  big  decline  in 
value  before  you  can  pass  them  along  to  some  one  else, 
the  whole  fabric  of  trade  and  industry  rests  upon  a 
shaky  foundation. 

George  B.  Smith,  Chicago's  first  banker  and  the 
creator  of  honest  money  and  business  standards  in  the 
West,  helped  us  out  of  our  first  slough  of  "wild  cat" 
money,  personal  scrip  and  due  bills,  with  his  issue  of 
bank  and  insurance  notes  always  worth  their  face  value. 
These  formed  the  one  stable  element  in  our  circulation 
until  state  laws  allowed  the  chartering  of  banks  and  the 
issue  of  notes  secured  by  state  bonds. 

Even  the  lack  of  sound  money,  however,  has  not  com- 
pelled a  halt.  I  happened  to  be  in  New  York  when  the 
fall  of  Fort  Sumter  began  the  Civil  War.  I  had  a  draft 
for  one  thousand  five  hundred  dollars  on  the  bank  at 
Rahway,  New  'Jersey.  I  knew  the  president,  Mr.  Price, 
very  well  and  on  my  way  home  I  stopped  to  get  the 
money.  I  asked  for  notes  on  his  bank,  as  I  had  confi- 
dence in  him  and  it.  To  my  surprise  he  refused.  "I 
can't  give  you  bills,"  he  explained.  "I  have  been 
calling  in  all  my  bank  notes  until  I  can  see  what  effect 
this  war  is  going  to  have,  and  I  shall  not  issue  any  until 
I  know.    All  I  have  is  gold  and  silver." 


SIXTY    YEARS    A    MANAGER 127 

Now,  one  thousand  five  hundred  dollars  in  silver  struck 
me  as  too  big  a  load.  I  objected.  We  compromised 
finally:  he  gave  me  seven  hundred  and  fifty  dollars  in 
gold  and  fifteen  hundred  new  half  dollars. 

That  was  the  last  real  money  I  saw  for  seventeen  years. 
The  government  suspended  specie  payments  December 
30,  1861.  Immediately  the  gold  and  silver  in  the  coun- 
try disappeared  as  completely  as  if  it  had  been  sunk  in 
mid-ocean.  For  a  while  we  had  no  medium  of  exchange 
except  the  "stump  tail"  currency  of  the  state  banks  and 
due  bills  issued  by  individuals  and  firms.  Then  came 
the  flood  of  greenbacks  from  the  government  presses: 
shipped  out  in  big  packing  cases  like  so  much  calico. 

The  national  bank  act  hurried  in  a  new  era,  but  one 
still  fraught  with  danger  to  business.  Values  were  based 
on  gold,  a  commodity  constantly  fluctuating  in  price. 
The  circulating  medium — though  bank  notes  secured  by 
government  bonds  or  directly  by  the  country's  credit — 
rose  and  fell  in  purchasing  power  in  inverse  ratio  to  the 
rise  or  fall  in  the  price  of  gold.  This  introduced  into 
even  the  smallest  retail  business  as  well  as  the  greatest 
undertaking  a  speculative  element  which  operated 
against  stability  and  efficiency  and  made  expansion 
dangerous.  Until  the  resumption  of  specie  payments  in 
1879  there  was  no  escape  from  this  speculative  condition : 
the  best  a  business  man  could  do  was  to  discount  its 
perils  and  keep  his  margin  of  safety  large  enough  to 
meet  the  morrow's  chances.  Looking  backward,  indeed, 
the  fact  impresses  itself  that  our  currency  system  has 
always  limped  far  in  the  rear  of  our  business  develop- 
ment. Then  the  fault  was  lack  of  stability.  And  when 
stability  had  been  secured  by  a  slow,  costly  and  painful 
process  of  evolution,  lack  of  elasticity  developed. 

Charles  Sholes,  brother  of  the  typewriter  inventor, 


128      TURNING    POINTS    IN    MANAGEMENT 

was  one  of  my  customers.  He  owned  half  of  the  stock 
of  the  Wisconsin  State  Telegraph  Company,  then  operat- 
ing a  line  between  Milwaukee  and  Madison.  In  common 
with  other  telegraph  lines  in  the  west,  it  was  losing 
money  and  Mr.  Sholes  was  trying  to  get  rid  of  it.  He 
had  promised  to  settle  his  bill  at  the  store  when  he  closed 
the  sale  of  his  stock.  The  deal  falling  through,  he  asked 
for  further  time,  explaining  his  difficulty.  Yielding  to 
the  fascination  the  telegraph  had  always  exerted  over 
me,  I  offered  to  buy  his  stock. 

WHEN  every  one  else  was  scoffing  at  the  telegraph, 
this   business  man  looked  into  the  future  and 
founded  a  fortune  on  what  he  was  able  to  see  there. 

So  important  a  means  of  communication,  it  seemed  to 
me,  must  be  susceptible  of  development  and  management 
on  a  paying  basis.  Mr.  Sholes  accepted  my  offer  and 
transferred  his  interest  to  me  for  five  hundred  dollars, 
only  a  fraction  of  the  cost  of  construction.  My  bargain, 
I  soon  discovered,  was  a  white  elephant.  Not  enough 
messages  were  sent  to  pay  operating  expenses :  business 
men  had  not  yet  learned  to  use  the  lines.  My  task  was 
to  cut  expenditures  squarely  in  two  or  find  some  new  use 
for  my  wires  and  operators. 

Revolving  my  dilemma,  it  struck  me  that  the  railroads 
ought  to  employ  my  service  in  handling  their  traffic. 
The  telegraph  would  enable  headquarters  to  keep  in 
touch  with  trains  out  along  the  line,  to  give  conductors 
running  orders,  to  meet  emergencies,  to  frame  up  a 
schedule  much  faster  than  the  current,  go-it-blind 
method  allowed.  I  carried  the  idea  to  E.  H.  Goodrich, 
the  president  and  manager  of  the  road  fiom  Milwaukee 
to  Prairie  du  Chien.    He  derided  it. 

"Preposterous,"  he  said.     "The  idea  of  trusting  a 


SIXTY    YEARS    A     MANAGER 129 

railroad  train  to  telegraphic  orders!  I'd  be  sent  to  an 
asylum  if  I  attempted  a  thing  like  that." 

I  hung  on,  however.  The  scheme  was  so  safe  and 
simple;  it  met  the  needs  of  the  railroad  and  my  own 
necessity  to  reduce  expenses  so  exactly  that  I  was  sure  it 
would  succeed.  In  the  end  Goodrich  capitulated  and 
agreed  to  try  the  plan  on  one  hundred  miles  of  his  road 
between  Milwaukee  and  Portage.  Literally,  it  proved  it- 
self in  a  day.  Goodrich  gave  me  no  peace  until  I  car- 
ried my  wires  to  Prairie  du  Chien. 

"We've  got  to  have  the  telegraph,"  he  declared.  "Be- 
tween here  and  Portage,  it's  daylight  and  safety.  Be- 
yond Portage  it's  midnight  until  the  train  returns  and 
reports  itself  safe." 

That  was  the  beginning  of  a  quarter  century  given 
chiefly  to  the  extension  of  the  telegraph.  I  sold  the  store 
to  my  brother,  my  construction  work  leaving  no  time  to 
give  it  the  personal  attention  which,  I  had  learned,  was 
the  basis  of  success  in  merchandising.  With  the  rail- 
roads eager  to  cooperate,  the  opportunities  in  the  tele- 
graph were  endless.  Virtually  our  outlay  ended  with  the 
establishing  of  the  lines.  The  contracts  gave  us  a  free 
right  of  way  and  provided  for  all  minor  repairs  by  sec- 
tion gangs.  The  operators  were  paid  by  the  railroads 
and  we  received  all  the  money  for  commercial  messages. 
When  these  reached  twenty  a  day  we  agreed  to  start  a 
company  office.  Later  when  our  lines  began  to  cover  the 
whole  northwest,  the  railroads  were  given  franking 
privileges  up  to  a  certain  amount  each  year,  not  only 
over  our  lines  but  those  of  other  systems  with  which 
we  had  reciprocal  agreements. 

With  one  exception,  marrying  railroads  and  telegraphs 
was  to  be  my  sole  business  for  many  years.  I  borrowed 
money  and  strung  wires  wherever  the  iron  rails  led  and 


130      TURNING    POINTS    IN    MANAGEMENT 

traffic  promised.  I  organized  the  Northwestern  Tele- 
graph Company  and  effected  a  connection  at  Chicago 
with  the  Western  Union,  which  Hiram  Sibley  and  J.  H. 
"Wade  of  Cleveland  had  evolved  from  a  tangle  of  wild 
cat  lines  in  Ohio,  Indiana  and  Michigan,  rehabilitating 
the  best  of  them.  Pushing  on  to  Minneapolis,  I  went 
thence  to  the  coast  along  the  Northern  Pacific  and  up 
into  Canada. 

In  all  I  built  twenty  thousand  miles  and  managed  the 
Northwestern  for  twenty-five  years.  But  the  value  of 
my  original  idea — cooperation  with  the  railroads — out- 
weighed all  my  later  service.  It  bridged  the  barren 
years  when  trade  and  industry  were  learning  to  utilize, 
but  failing  to  support  the  new  engine  of  communication. 
It  freed  the  railroads  from  guesswork  and  initiated  mod- 
ern railroading. 

It  was  not  a  march  from  success  to  success  by  any 
means.  At  one  time  the  Minneapolis  office,  for  instance, 
would  have  been  closed  but  for  a  citizens'  subscription 
to  pay  the  operator's  salary.  But  progress  was  fairly 
uniform.  The  important  lines  were  built  along  rail- 
roads; the  only  exception  being  the  line  from  Min- 
neapolis to  Winnipeg,  then  Ft.  Geary,  the  stockaded 
trading  post  of  the  Hudson  Bay  Company.  This  I  con- 
structed along  the  old  trail  of  the  Red  River  carts 
through  the  woods  and  across  the  prairies.  Even  that 
was  not  a  speculation,  our  contract  with  the  H.  B.  C. 
guaranteeing  us  profits  from  the  outset.  When  I  re- 
tired from  the  Northwestern  presidency  to  manage  my 
manufacturing  business  at  Kenosha,  the  Northwestern 
had  one  thousand  eight  hundred  offices,  three  hundred  of 
them  supported  by  commercial  messages,  the  others 
operated  in  conjunction  with  the  railroads.  My  original 
investment  of  five  hundred  dollars  had  grown  to  be  a 


SIXTY    YEARS    A    MANAGER 131 

four  million  dollar  property. 

From  telegraphs  to  railroads  was  only  a  step.  I  took 
it  when  the  presidency  of  the  Kenosha,  Rockford  and 
Rock  Island  was  practically  forced  upon  me.  The  road 
was  bankrupt,  its  stock  subscription  exhausted,  an  issue 
of  $500,000  bonds  already  made  and  no  money  left  to 
buy  the  forty  miles  of  railroad  iron  needed  to  connect  up 
the  two  strips  of  track  already  built.  A  number  of 
Kenosha  men  were  interested  in  it :  my  recent  success  in 
the  telegraph  game  inspired  in  them  the  hope  that  I 
could  save  their  investment  or  at  least  finish  the  road. 
That  was  the  main  idea,  to  finish  the  road.  The  men  who 
built  it  were  more  interested  in  the  development  of  their 
country  than  in  the  prospective  profits.  I  yielded  to 
their  arguments. 

LIGHT  and  dark  hours  in  the  varied  career  of  a  busi- 
ness man — Mr.  Simmons  finds  that  credit  can  make 
or  break  the  business  man's  ambitions. 

To  secure  rails  for  that  forty  miles  was  the  first  task. 
With  letters  of  introduction  I  went  to  Philadelphia, 
where  I  finally  settled  on  two  Quaker  iron  brokers  as  the 
men  most  likely  to  furnish  me  the  iron.  They  couldn't 
see  my  proposition — a  sale  on  long-time  credit,  with  no 
money  down — but  they  asked  me  to  dinner  and  we 
learned  to  like  one  another.  They  gave  me  no  encourage- 
ment, but  I  hung  on  for  two  weeks.  Finally  they 
capitulated.  They  would  supply  my  iron  on  two  con- 
ditions. First,  they  stipulated  that  I  should  personally 
indorse  the  road 's  notes  given  in  payment ;  second,  that  I 
should  stick  to  the  road  until  the  debt  was  satisfied. 
The  conditions  were  strenuous;  they  required  me  to  as- 
sume the  whole  thing  as  a  personal  obligation.  But  no 
other  course  was  open :  I  consented. 


132      TURNING    POINTS     IN    MANAGEMENT 

The  war  began  before  the  last  spikes  were  driven  in 
July,  1861.  By  a  coincidence,  our  first  trains  were  run 
to  a  stockholders'  meeting  at  Harvard,  midway  between 
the  terminals,  on  the  day  Bull  Run  was  fought.  Four 
hundred  stockholders  were  present,  but  the  shadow  of 
the  Union  defeat  was  on  the  meeting,  Mr.  Sholes  having 
telegraphed  the  news  to  me  from  Kenosha.  "When  the 
proposal  to  assess  the  stockholders  $250,000  to  supply 
equipment  and  start  operations  was  put  to  vote,  only  one 
ballot  was  cast  for  it — and  that  was  mine.  We  had  a 
railroad,  but  no  rolling  stock,  and  no  one  wanted  to  buy 
any.  Finally  they  voted  to  turn  the  road  over  to  me 
bodily  and  begged  me  to  equip  and  start  it. 

That  was  my  dark  hour.  I  was  bankrupt,  though  no 
one  knew  it.  I  owed  $150,000.  Because  of  my  obliga- 
tions I  had  not  answered  President  Lincoln 's  first  call  for 
volunteers.  Now  I  knew  I  could  never  answer  the  call, 
except  in  dishonor.  I  rode  back  to  Kenosha,  seated  on  a 
keg  on  one  of  our  flat  cars,  as  near  despair  as  I  have 
ever  been.  That  night  I  did  not  sleep ;  the  one  possible 
solution  of  my  dilemma  was  so  unreasonable. 

The  only  recourse  was  an  appeal  to  our  bondholders 
to  allow  a  prior  lien  to  cover  the  equipment.  The  major- 
ity of  the  bondholders  lived  in  Newark ;  thither  I  went 
to  try  to  persuade  them.  They  refused.  I  repeated 
tactics  which  had  won  at  Philadelphia,  but  this  was  a 
harder,  a  more  desperate  fight.  In  the  end,  my  per- 
sistence won.  My  absolute  control  of  the  road  no  doubt 
helped  to  persuade  them  to  my  aid.  They  voted  the 
prior  lien ;  $200,000  in  bonds  were  sold,  the  road  equipped 
and  operation  begun. 

Like  most  new  roads,  however,  earnings  were  slow  to 
increase.  I  paid  the  Quaker's  notes  as  they  matured,  out 
of  my  telegraph  profits.     It  cost  me  $100,000  cash  to 


SIXTY    YEARS    A    MANAGER 133 

protect  my  credit  in  this  railroad  venture.  I  had  learned, 
however,  that  credit  was  a  more  valuable  asset  than 
capital,  and  I  paid  the  price  without  regret. 

.Credit  is  a  business  tool  we  have  not  all  learned  to 
use  yet.  Here  is  its  drawback:  the  tax  trade  and  in- 
dustry pay  every  time  we  have  a  period  of  depression. 
We  are  only  one  generation  away  from  the  time  when 
gold  commanded  an  enormous  premium  and  enriched 
those  who  had  the  craft  to  hoard  it  beforehand.  The  in- 
stinct of  distrust  is  still  strong  in  us,  and  the  temptation 
to  withdraw  our  money  at  the  first  hint  of  danger  hardly 
to  be  resisted. 

The  consequence,  of  course,  is  a  period  of  stringency, 
which  lasts  until  the  restoration  of  confidence — the  re- 
turn to  the  saner  belief  that  money  is  worth  no  more 
than  the  things  it  will  buy — groceries,  furniture,  real 
estate,  bank  credit.  In  time,  I  believe,  we  will  outgrow 
even  these  temporary  reversions  to  the  outlook  and  the 
business  code  in  force  when  credit,  for  the  majority, 
meant  a  thing  to  be  distrusted  in  the  giving  or  abused  in 
the  receiving  quite  as  often  as  to  be  used  as  a  means  of 
mutual  profit  and  advantage.  I  believe  that  panics  help 
more  than  they  harm,  working  individual  hardship  but 
compelling  business  to  go  down  to  bed  rock,  to  cut  out 
the  non-essentials,  and  to  correct  inefficient  methods 
which  hinder  progress  even  in  prosperous  years. 

Going  back  to  those  first  years,  it  seems  as  if  business 
had  been  born  and  had  grown  up  under  my  eyes. 

Time  lost  in  traveling  was  only  one  of  the  transporta- 
tion handicaps.  Buying  twice  a  year,  the  merchant  of 
that  time  was  called  upon  to  gauge  the  probable  needs 
of  his  patrons  during  a  winter  which  might  be  long  or 
short,  mild  or  severe.  On  his  forecast  depended  in  large 
measure  the  fortunes  of  the  season.     Re-orders  were  out 


134      TURNING    POINTS    IN    MANAGEMENT 

of  the  question  after  navigation  closed :  to  exhaust  his 
stock  in  any  staple  line  was  as  serious  an  error  as  to 
load  up  with  goods  which  he  could  not  move  in  time  to 
meet  the  notes  given  to  his  jobbers.  Insufficient  stock 
sacrificed  profits  and  sent  regular  customers  elsewhere : 
too  generous  purchases  left  him  at  the  season's  close 
with  most  of  his  capital  locked  up  in  stock  to  be  carried 
over.  The  limitations  this  semi-annual  buying  put  on 
the  retailer  were  many  and  serious.  He  was  forced  to 
buy  gross  or  half -gross  lots  of  a  single  staple  article, 
where  now  a  dealer  buys  in  dozens  and  lays  in  several 
related  or  contrasting  lines.  The  investment  was  about 
the  same,  but  the  retailer  today  can  stimulate  sales  by 
offering  choice  of  many  articles. 

Yet  I  have  observed  not  a  few  young  storekeepers  and 
many  long  established  in  business,  who  have  not  learned 
how  to  use  the  tremendous  advantages  modern  trans- 
portation and  trade  conditions  offer.  / 

They  buy  the  bulk  of  a  season 's  supplies  at  one  time 
when  right  use  of  their  capital  and  prudent  merchan- 
dising both  ordain  weekly  or  monthly  orders.  They 
have  not  learned  the  lesson  that  the  busy  dollar  alone 
earns  profits  and  that  the  development  of  transporta- 
tion and  communication  makes  necessary,  as  well  as 
possible,  the  frequent  turning  of  a  retail  stock. 


# 


'C'VERY  great  business  man  had  a  beginning  of  his  career 
**  sometime — usually  a  humble  one.  No  man  should  ad- 
mit even  to  himself  that  he  has  not  the  makings  of  a  future 
captain  of  industry. 

— Harlow  E.  Bundy 

General  Manager,  International  Time  Recorder  Company 


HARLOW  N.  HIGINBOTHAM 

(contributor  of  chapter  xn) 

When,  toward  the  close  of  the  last  century, 
Marshall  Field  needed  brains  and  money, 
junior  partnerships  in  his  company  were  of- 
fered to  a  remarkable  group  of  young  men. 
Mr.  Field  picked  these  partners  with  money  as 
a  secondary  consideration,  and  measured  only 
the  value  of  the  benefits  they  could  bring  to  the 
business.  Like  Mr.  Field,  they  had  all  started 
as  clerks  and  demonstrated  their  ability. 

Harlow  N.  Higinbotham  was  the  first  of  the 
young  men  to  come  into  a  junior  partnership. 
He  was  marked  by  Mr.  Field  as  a  man  "pos- 
sessing one  of  the  most  analytical  minds  I  have 
ever  met."  Since  Mr.  Field  was  the  merchant 
and  others  handled  the  financing,  there  gravi- 
tated toward  Mr.  Higinbotham  the  work  of 
handling  the  credits.  And  in  a  new  country  and. 
during  the  early  days  of  a  business,  the  making 
of  credits  is  one  of  the  most  important  functions 
of  the  house,  for  in  it  is  bound,  the  institution's 
entire  attitude  toward  customers. 

Mr.  Higinbotham's  early  work  crystallized 
principles  which  have  since  ruled  the  credit  de- 
partment of  the  house.  He  had  two  main 
objects:  first,  to  make  his  credits  safely;  second, 
to  develop  the  firm's  customers  and  the  country 
reached  by  the  firm. 

Marshall  Field  &  Company,  through  its 
credit  policy  and  attitude  toward  retailers, 
probably  did  more  in  the  last  century  than  any 
other  commercial  institution  in  the  country  to 
build  up  the  West  and  develop  business  strength 
there.  It  started  businesses;  it  "carried"  men; 
it  directly  interested  itself  in  counties,  states 
and  sections  of  the  country. 

While  guiding  this  influence,  Mr.  Higin- 
botham looked  into  the  hearts  and  measured  the 
impulses  of  thousands  of  business  men.  The 
causes  behind  failures  came  to  his  attention 
time  and  again,  until  he  could  sort  them  into 
definite  classes.  This  knowledge  was  the  most 
valuable  asset  created  by  his  remarkable  ex- 
perience. In  the  chapter  which  follows  he  has 
written  it  into  a  series  of  "stumbles",  so  that 
you,  too,  can  analyze  and  answer  the  question: 
how  can  men  avoid  failure?" 


XII 

MANAGEMENT  BLUNDERS 
TO  AVOID 


By  Harlow  N.  Higinbotham 

President,  The  National  Grocer  Company 

Former  Credit  Manager,  Marshall  Field  and  Company 


JOHNSON  was  a  responsible  merchant  in  a  Lake 
Superior  town,  and  had  been  doing  business  with  us 
for  several  years.  One  spring  he  made  unusually  heavy 
purchases  of  us.  Business  had  been  prosperous,  the  out- 
look was  good.  Before  he  left  for  home,  I  asked  him 
how  much  insurance  he  carried. 

"I  carry  three  thousand  dollars  on  my  goods,"  he 
replied. 

"That  does  not  nearly  cover  your  reduced  stock  as  it 
now  inventories,"  I  warned  him,  "and  you  should  at 
once  take  out  enough  new  insurance  to  protect  the  stock 
you  have  just  purchased." 

This  he  promised  to  do,  immediately  he  got  home,  but 
he  failed  to  do  it,  through  neglect  and  rush  of  work. 
The  new  goods  arrived  and  were  put  on  the  shelves,  and 
every  day  Johnson  promised  himself  that  he  would  at- 
tend to  the  insurance  matter  on  the  morrow.  But  he 
waited  just  a  day  too  long ;  for  one  night  the  store  caught 
fire,  and  in  the  morning  Johnson  found  himself  a  ruined 
man. 

He  got  his  three  thousand  dollars  of  insurance  money 
promptly;  but  our  bill  exceeded  that  amount,  and  if  he 
paid  us  he  would  be  without  capital  with  which  to  begin 
business  over  again.    He  didn't  "squeal."  He  did  what 


BLUNDERS    TO    AVOID 137 

any  honest  man  would  have  done — sent  the  money 
straight  to  us.  There  was  no  tear-shedding;  just  a 
manly,  straightforward  statement  from  him. 

"It  was  altogether  my  fault,"  he  wrote,  "that  the 
stock  was  not  fully  protected,  as  it  should  have  been. 
This  insurance  money  is  all  I  have,  but  it  rightly  belongs 
to  you,  and  will  almost  cover  your  bills. ' ' 

HONESTY  deserves  the  sort  of  encouragement  which 
kept  for  this  firm,  during  perhaps  a  generation,  a 
profitable  account,  because  the  credit  man  looked  ahead. 

There  was  no  hesitation  in  my  reply.  I  returned  the 
draft  to  him  and  wrote :  ' '  Take  this  money  and  put  it  in 
your  bank.  Get  right  to  work  and  buy  a  new  stock.  I 
will  pass  your  orders  and  will  accept  your  notes  in 
settlement  of  the  entire  account,  arranging  for  payment 
on  such  time  as  will  enable  you  to  meet  your  obligations. 
Rent  a  new  store,  and  see  how  quick  you  can  open  for 
business. ' ' 

I  sized  Johnson  up  right.  He  not  only  paid  us  in 
full,  but  became  one  of  our  very  best  customers.  Today 
he  is  the  most  properous  merchant  in  his  territory. 

You  might  call  that  wilful  neglect.  But  the  best  busi- 
ness men  stumble;  however,  the  wise  learn  from  these 
trying  experiences,  and  they  don't  stumble  the  next 
time — at  least,  not  for  the  same  reason.  But  they  all 
trip,  some  time  or  other,  and,  if  you  knew  the  secret 
history  of  a  business,  you  would  find,  in  almost  every 
case,  that  financial  ruin  at  least  once  stared  the  man  in 
the  face. 

Once  a  business  is  started  in  the  right  location  amidst 
favorable  surroundings,  a  great  danger  comes  with  the 
attempt  to  do  more  business  than  the  capital  will  stand. 
Usually,   this  is  referred  to  as  "insufficient  capital." 


138      TURNING    POINTS    IN    MANAGEMENT 

More  often,  it  is  not  so  much  lack  of  capital  as  it  is  the 
folly  of  going  beyond  the  capital.  The  merchant  is  un- 
willing to  keep  within  his  means,  either  in  his  business, 
or  in  his  home — sometimes  both.  He  has  not  the  patience 
to  wait  until  his  customers  force  him  to  have  more  room. 
He  adds  unnecessary  space,  fills  it  with  goods  on  credit, 
and  reaches  out  for  customers,  seeking  to  drag  them  into 
his  store  and  make  them  buy.  This  involves  frantic  ad- 
vertising, and  a  splurge  generally.  All  the  while  he  is 
getting  more  and  more  into  debt,  and  his  end  is  not  far 
to  see. 

I  knew  a  merchant  who  enlarged  his  quarters  and 
doubled  up  his  stock  simply  because  he  was  afraid  a 
competitor  might  have  a  bigger  store,  with  a  larger  as- 
sortment of  goods  to  select  from.  His  business  didn't 
justify  the  expansion.  He  was  doing  well  before  he 
made  the  fatal  blunder,  but  he  couldn't  bear  to  see  a 
rival  get  ahead  of  him. 

"I'm  going  to  beat  out  Jones,"  he  boasted  to' his 
friends;  "he's  making  a  great  front,  but  I  intend  to  go 
him  one  better.  I  don't  propose  to  play  second  fiddle  to 
anybody."  So  he  stretched  his  credit,  encountered  pro- 
hibitive expenses,  and,  unable  to  meet  his  bills,  quickly 
collapsed.  He  had  failed  to  see  the  danger  signal. 
Rivalry  spelt  ruin. 

Another  merchant  unwisely  branched  out,  not  to  keep 
pace  with  a  competitor,  but  to  steal  a  march  on  his 
rival.  ' '  I  'm  going  to  leave  that  fellow  so  far  in  the  rear 
that  he'll  never  catch  up  with  me,"  he  insisted.  "When 
he  wakes  up  I'll  have  this  whole  town  corralled."  It 
was  the  boaster  who  woke  up — a  rude  awakening,  for 
he  found  himself  clerking  in  another  man's  store,  hia 
business  gone  and  his  capital  dissipated. 

Looking  on  the  bright  side,  I  know  a  third  merchant 


> 


BLUNDERS    TO    AVOID 139 

who  faced  the  same  temptation  and  faced  it  many  times, 
but  steadfastly  refused  to  go  heavily  into  debt.  He  let 
his  competitors  go  along  as  they  pleased,  minding  his 
own  business,  contenting  himself  with  the  care  of  the 
trade  which  he  had,  and  getting  as  much  more  business 
as  he  could  without  overreaching  his  capital.  After 
a  while  his  store  began  to  be  crowded,  and  every  day  the 
crowd  grew.  He  hired  more  clerks,  and  filled  his  shelves 
as  full  as  he  could,  but  still  the  people  flocked  to  him. 
Finally,  his  quarters  became  hopelessly  insufficient,  and 
then,  but  not  till  then,  did  he  rent  more  space.  After- 
ward, he  added  to  his  store  accommodations  at  frequent 
intervals. 

EXPANSION  demands  a  foundation  not  unlike  the 
forest  of  earth-covered  pillars  on  which  the  modern 
building  stands — every  support  must  be  absolutely  sound. 

Necessity — and  that  alone — is  the  sole  excuse  for  ex- 
pansion. When  a  man's  store  is  overcrowded,  and  cus- 
tomers are  clamoring  for  more  goods  than  can  be  sold 
conveniently,  or  for  a  greater  variety  than  the  store 
affords,  then  is  the  time  to  grow.  All  the  great  establish- 
ments have  grown  that  way.  If  you  study  their  evolu- 
tion, you  will  find  that  they  added  to  their  quarters 
only  after  the  stores  were  badly  crowded,  both  behind 
the  counters  and  in  front  of  them.  The  managers  knew 
that  they  could  sell  the  new  goods  before  they  bought 
them ;  or  before  they  signed  a  new  lease,  and  contracted 
for  additional  expense. 

Unwarranted  expansion  is  a  more  dangerous  policy  to 
a  manufacturing  or  producing  concern  than  to  a  mer- 
cantile house.  With  the  former,  every  dollar  of  in- 
creased business  means,  not  merely  the  carrying  of  the 
equivalent  in  added  stock,  but  more  factory  space,  more 


140      TURNING    POINTS    IN    MANAGEMENT 

machinery,  more  raw  materials  at  hand,  an  augmented 
sales  force,  additional  administrative  officers — with  all 
the  increased  expenses  which  accompany  this  expansion. 
"Spreading  out  too  thin,"  is  the  way  a  banker  expresses 
it.  The  banker  will  tell  you,  to  use  the  homely  figure, 
that  a  business  is  like  a  piece  of  bread  and  capital  the 
butter  spread  upon  it.  With  a  fixed  amount  of  butter, 
the  bigger  your  bread  slice,  the  thinner  your  spreading. 
And  when  the  owner  of  the  business — the  man  with  the 
piece  of  bread,  to  carry  out  the  figure — stumbles  or  falls, 
losing  his  grip  on  his  prized  possession,  then  the  banker, 
to  whom  he  has  gone  for  assistance,  may  say  rather 
cynically : 

"When  you  drop  your  bread,  you  know  it  always  falls 
on  the  buttered  side." 

Three  men  started  a  furniture  factory.  One  was  a 
manufacturer,  one  had  a  knowledge  of  sound  finance  and 
good  management,  the  third  was  a  salesman.  Their  busi- 
ness was  restricted,  at  the  outset,  to  the  manufacture  of 
a  certain  specialty — a  small  patented  accessory.  The 
size  of  their  factory  was  entirely  warranted  by  their 
capital,  and  their  capital  further  permitted  them  to  do 
a  moderate  business  with  the  dealer. 

TWO  of  the  partners  wanted  to  expand;  they  overruled 
the  financial  man;  they  tied  up  the  ready  money — 
hard  times  followed  unexpectedly,  bringing  failure. 

They  prospered.  Once  the  business  was  in  full  swing, 
their  books  showed  a  real  profit,  month  after  month. 
Business  seemed  to  come  so  easily,  two  of  the  partners 
began  to  advocate  an  extension  to  the  manufacture  of 
kindred  lines.  They  argued  that  their  small  patented 
accessory  had  already  made  the  concern  a  name.  And 
they  insisted  that,  with  this  reputation,  they  could  make 


BLUNDERS    TO    AVOID 141 

their  name  a  hall-mark  for  other  lines  of  furniture.  This 
was  some  years  ago  in  the  times  of  growing  prosperity 
in  all  businesses. 

The  financial  man  of  the  firm,  whose  task  it  was  to 
pay  for  the  raw  material,  meet  the  pay  roll  and  all  in- 
cidental expenses,  and  make  the  outlay  balance  with  the 
income,  was  not  in  favor  of  the  change  of  policy.  The 
financial  man  was  overruled  two  to  one  by  the  manu- 
facturer and  the  salesman.  The  expansion  was  deter- 
mined upon.  The  ready  money  of  the  concern  went  into 
the  building  of  an  addition  to  the  plant.  New  lines  of 
manufactured  goods  meant  bigger  sales,  of  course,  but 
this  entailed  greater  credits  outstanding.  To  carry  these 
credits  the  financial  man  had  to  go  to  the  bank  for  more 
money  and  he  got  it  because  times  were  good.  A  larger 
factory  and  office  organization  was  necessary  to  carry 
on  the  expanded  business,  and  expenses  increased  in 
every  department.  More  and  more  the  financial  man  had 
to  scheme  and  turn  and  twist  to  meet  the  firm 's  current 
obligations. 

Sometimes — but  only  in  very  prosperous  times — a 
business  is  lucky.  The  owners  who  overstep  the  rules 
do  not  suffer  the  consequences.  Every  condition  turns 
out  favorably.  But  such  good  fortune  does  not  come  in 
the  lean  years.  In  the  case  I  am  citing,  when  money  be- 
gan to  tighten  in  the  year  1907,  adverse  conditions  were 
encountered,  and  instead  of  having  several  years  in 
which  to  pull  out  from  under  their  unwarrantedly  heavy 
load,  the  partners,  within  a  few  months  after  the  ex- 
pansion was  inaugurated,  faced  the  situation  of  having 
their  loans  called  by  the  bank  and  all  outside  financial 
support  withdrawn  from  them.  Thus,  they  were  thrown 
entirely  upon  their  own  resources  to  provide  a  greater 
capital  needed  to  swing  the  bigger  business.    I  need  not 


142      TURNING    POINTS    IN    MANAGEMENT 

add  that  the  concern  went  under. 

Let  us  illustrate:  Suppose  a  man  has  the  stone  to 
construct  a  building  one  hundred  by  one  hundred,  and 
sink  the  foundation  so  deep  that  no  winds,  no  floods  from 
abnormal  rains,  and  no  undermining  from  an  adjacent 
new  building  of  the  skyscraper  type  or  from  a  subway 
in  the  street  could  possibly  harm  the  foundation.  If  he 
were  to  build  according  to  this  plan,  his  building  would 
be  secure — built  upon  a  rock. 

BUILDING  upon  sand  results  in  disaster  eleven  times 
out  of  a  dozen — avoid  risks  by  carefully  considering 
all  the  contingencies  which  may  face  your  proposition. 

But,  knowing  he  could  rent  a  building  with  twice  the 
floor  space,  suppose  he  is  unwise  enough  to  argue :  "Of 
course,  I  haven 't  stone  to  put  into  a  heavier  foundation, 
but  then  there  may  not  be  a  hurricane  for  five  years; 
we  may  have  no  torrents  of  rain,  and  why  not  trust  to 
luck  that  there  will  be  no  neighboring  skycraper  or 
subway.  I'll  take  the  chance.  I'll  construct  my 
foundation  only  half  as  deep  as  I  would  if  I  had  the 
necessary  stone.  And  then  I  will  rebuild  the  whole 
structure  when  I  have  put  by  enough  money  from  the 
big  rentals  I  am  sure  to  get."  Unwise  is  this  man.  If 
conditions,  happily,  proved  altogether  favorable,  his 
building  would  stand,  but  if  any  one  of  four  or  five  con- 
tingencies occur  his  building  will  come  down — because  it 
is  built  upon  the  sand. 

Men  should  be  tried  out  in  the  business,  if  possible, 
before  they  are  given  a  partnership.  Marshall  Field  had 
a  policy  of  taking  partners  from  his  organization,  but 
he  never  associated  a  man  in  the  enterprise  until  he  had 
been  tested  to  a  certainty.  First,  Mr.  Field  would  study 
the  man  for  a  considerable  period;  then,   if  he   con- 


BLUNDERS    TO    AVOID 143 

sidered  him  worthy,  he  would  allow  him,  for  a  time,  a 
percentage  on  the  profits  of  his  department,  in  addition 
to  his  salary ;  finally,  if  the  man  showed  that  this  in- 
centive moved  him  to  the  proper  effort,  Mr.  Field  would 
take  him  into  the  business. 

Ordinarily,  the  way  this  was  done  was  to  charge  him 
with  the  value  of  a  certain  interest  or  capital,  and  each 
year  charge  him  with  interest  on  this  capital.  Then, 
after  drawing  an  agreed  salary,  (enough  for  his  personal 
and  household  expenses)  he  was  credited  with  the  re- 
mainder of  the  earnings  on  his  pro  rata  interest  in  the 
house.  In  time,  the  new  partner's  interest  in  the  busi- 
ness was  entirely  paid  for  in  this  way.  The  harder  the 
man  worked,  you  see,  the  faster  the  debt  was  wiped  out. 
There  were  always  these  steps  in  acquiring  a  part- 
nership in  the  house  of  Field's,  and  there  was  never  any 
danger,  by  this  process,  of  getting  the  wrong  partner. 

It  is  a  significant  fact  that  Mr.  Field  never  took  a 
partner  outside  his  organization.  He  permitted  his  men 
to  invest  their  own  money  in  the  business,  if  they  saw 
fit — to  pay  for  the  interest  he  had  sold  them,  in  whole  or 
in  part — but  he  did  not  want  any  outside  capital  to 
come  in.  He  desired  to  know  his  partners  absolutely. 
Even  when  he  started  in  business  for  himself,  his  asso- 
ciates were  men  who  had  been  in  the  same  organization 
with  which  he  was  connected,  and  he  knew  them 
thoroughly. 

I  have  observed  that  a  great  many  men  take  partners 
on  a  plan  radically  different  from  this.  Often,  they 
take  men  from  outside  their  organizations  because  of  the 
need  of  additional  capital:  there  are  times,  no  doubt, 
when  this  cannot  well  be  avoided.  In  doing  so,  however, 
business  men  have  no  opportunity  to  study  their  pros- 
pective associates  with  the  critical  method  employed  by 


144      TURNING    POINTS    IN    MANAGEMENT 

Mr.  Field.    I  believe  it  is  dangerous  to  follow  any  other 
plan  than  the  one  I  have  outlined. 

One  danger  point  in  particular  I  would  emphasize. 
It  gets  down  to  the  very  core  of  business  principles.  I 
refer  to  the  attempt,  too  often  made  and  frequently  con- 
summated, to  sell  goods  to  customers  who  will  not  benefit 
through  the  purchase.  "Caveat  emptor"  — "let  the 
buyer  beware ' ' — is  not  a  part  of  wise  merchandizing.  Yet 
I  have  known  a  great  number  of  business  men  whose 
chief  idea  was  to  sell,  and  if  the  purchaser  did  not  get 
what  was  best  for  him,  why  that  was  his  lookout.  Travel- 
ing salesmen  commonly  f  all  into  this  great  error ;  but  the 
house  itself  should  guard  against  it  in  every  way,  and 
train  its  salesmen  to  study  the  wants  and  needs  of  cus- 
tomers. To  overload  a  customer,  or  to  sell  him  the  wrong 
goods,  is  unpardonable,  and  will  surely  bring  a  disastrous 
reaction.  It  is  a  serious,  very  serious,  danger  point  when 
a  house  reaches  the  time  where  the  mere  making  of  the 
sale  supplants  the  principle  of  actual  service.  No  matter 
how  valuable  the  goods  may  be  of  themselves,  the  trans- 
action can  only  injure  the  seller  if  the  commodity  is  un- 
suited  to  the  needs  of  the  customer. 

BENEFIT  to  the  customer  is  the  only  object  you  should 
strive  for — a  satisfied  customer  and  a  fair  profit  go 
together  and  are  never  separated  for  long. 

I  know  of  a  recent  case  where  a  husband  bought  his 
wife  a  coat,  paying  one  of  the  large  department  stores 
of  Chicago  three  hundred  dollars  for  the  garment.  It 
was  a  beautiful  coat,  well  worth  the  money,  but  when 
the  lady  received  it  she  was  greatly  dissatisfied.  It  was 
not  what  she  herself  would  have  selected,  and  she  at- 
tempted to  return  it,  and  exchange  the  garment. 

But  the  store  had  been  specially  anxious  to  dispose  of 


BLUNDERS    TO    AVOID 145 

this  particular  coat ,  for  it  was  not  an  article  readily  sold. 
Then,  too.  the  season  was  well  advanced — it  was  after 
the  holidays — and  the  coat  was  a  fur  garment.  To  carry- 
it  over  meant,  probably,  to  lose  it.  So  the  lady  was  in- 
formed that  her  husband's  unfortunate  purchase  could 
not  be  exchanged  or  returned. 

During  the  succeeding  days  this  dissatisfied  customer 
told  her  story  to  her  many  friends,  every  one  of  whom 
sympathized  with  her  and  was  made  unhappy  by  her 
experience.  She  did  not  want  that  coat,  she  insisted ;  it 
was  entirely  unsuited  to  her  taste  and  ideas.  Every- 
where she  went  she  talked  about  the  garment,  and  a 
shadow  was  cast  upon  the  house  which  had  sold  it  to  her 
husband.  The  matter  came  to  my  attention,  and  al- 
though I  had  no  interest,  save  a  friendly  one,  in  the 
circumstance,  my  training  and  experience  rebelled 
against  such  a  short-sighted  policy  as  the  store  had 
shown.  And  I  sat  down  and  wrote  to  the  house,  in  part, 
as  follows: 

"You  might  better  take  the  coat  and  burn  it,  rather 
than  force  it  on  a  customer  whom  it  will  not  benefit." 
My  suggestion  prevailed,  and  the  coat  was  taken  back. 

This  principle  holds  true  throughout  all  merchandiz- 
ing. 

MISFITS  are  to  be  pitied,  in  business  and  out  of  it — 
the  more  so  because  usually  their  plight  could  have 
been   prevented   by   observing  these  simple  precautions. 

I  recall  one  instance  where  a  merchant  selected  the 
wrong  location — a  very  common  mistake,  yet  one  of  the 
easiest  to  see  in  advance.  If  his  credit  man  could  see  the 
error  of  judgment — and  he  did — why  not  the  merchant  t 
This  is  almost  the  first  danger  that  confronts  a  man 
starting  in  business,  and  he  faces  it  afterward,  v  henever 


146      TURNING    POINTS    IN    MANAGEMENT 

he  seeks  a  new  location.  Because  men  do  not  analyze  the 
proposition,  they  blunder. 

In  selecting  a  site  or  a  town,  the  first  consideration  is 
markets.  Some  men  do  not  weigh  even  this  factor 
properly.  Others  take  the  market  element  into  account, 
but  go  no  further.   For  this  reason  they  become  misfits. 

A  man  establishes  himself  amongst  a  race  antagonistic 
to  his  own.    He  fails  because  he  is  a  misfit. 

Another  man  fails  because  he  attempts  to  do  business 
with  a  people  whose  religion  differs  radically  from  his 
own — a  misfit. 

A  merchant,  brought  up  in  a  certain  environment, 
moves  to  a  town  where  market  requirements  are  decided- 
ly different.  It  is  almost  a  foregone  conclusion  that 
this  misfit  will  not  succeed.  To  him  the  reasons  for  his 
failure  may  appear  trivial  indeed — temperamental  rea- 
sons, merely — but  the  attitude  of  the  buying  public  is 
affected  by  subtle  considerations. 


# 


"\\7TIEN  order  has  supplanted  careless,  wasteful  methods, 
™  '    and  selling  prices  contain  only  a  fair  charge  for  materi- 
als, labor  and  expense,  the  public  can  not  deny  those  who 
render  this  service  proper  compensation  without  injury  to 

— E.  W.  McCullough 

Secretary  and  Ger  eral  Manager, 
National  Implement  and  Vehicle  Association 


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